THE IRS FRAUD EXPOSED
By: Thomas T. Scambos, Jr
THE CODE HAS BEEN BROKEN !
The Paperwork Reduction Act Notice of 1980 is the key to exposing and understanding the truth about America's tax laws. The truth has been in print (the code) since 1916, and reaffirmed in print again recently. In 1985, when the IRS complied with the mandates of the Paperwork Reduction Act by providing to the Office of Management and Budget (OMB) the Table shown in 26 CFR 602.101, the stage was set to effect the end of the IRS in America. The IRS cannot ask you for more information, under any given code section, than this Table shows is required by that code section. This Table is from Title 26 (the Internal Revenue Code), Code of Federal Regulations (CFR), which implement the United States Code (USC) sections providing for the legal reduction of paperwork, and the administrative costs associated with its maintenance.
The following, showing the actual legal code sections that the IRS itself cites and invokes, should serve as proof beyond any reasonable doubt what-so-ever that the income tax laws are being intentionally misapplied to all American Citizens in America, in order to fund an unspoken, and un-American political agenda of socialist global control. To understand just how important the Paperwork Reduction Act is to the tax laws, keep in mind that since 1980 the IRS has been required by law to provide a notice of it (Notice 609) with every single piece of correspondence they issue to individuals. You can find a complete copy of this notice on Page 1 of any Form 1040 Tax Instruction Booklet. But, the IRS won’t tell you about the Code of Federal Regulations where you can lookup the information collection (form) requirements of any given code section. They just tell you that you’re supposed to know the law. Well, after reading this book, YOU WILL !
CHAPTER 1
IMPLEMENTATION
United States Code Annotated - General Index
Where does one begin an examination of the United States tax laws. The United States Code is voluminous and very complex. So, let us start at the beginning. Here, in the General Index for the United States Code Annotated from 1994, under the major heading Citizenship, we try to find an entry for Income Tax. But we only find:
CITIZENSHIP, cont'd.
........
Illegitimate Children 8 § 1409
Immigration, this index
Imprisonment,
Citizens by foreign governments 22 § 1732
Detention of Citizens prohibited except by
Act of Congress 18 § 4001
Indians,
Generally 8 § 1401
........
Where is income tax? There is nothing listed or shown for Income Tax in the General Index under 'Citizenship'. It would be there between 'Imprisonment' and 'Indians' if it existed. It’s not listed. There are no income tax code statutes shown here in the General Index as being applicable under 'Citizenship' because, as you will see, the income tax does not apply to a Citizen's domestic earnings and income earned by RIGHT, and the law accurately records that legal fact.
Here, in the General Index again, we see the entries for Citizens under the major heading Income Tax.
INCOME TAX, Cont'd.
.......
Citizens,
About to depart from U.S., waiver of requirements
as to termination of taxable year 26 § 6851
Living abroad, exclusion of earned income and
foreign housing costs from gross income 26 § 911
Civic Leagues,
....
How many code sections are shown here, in the General Index, as being applicable to Citizens under income tax? There are two sections, and they both have to do with what? They both have to do with foreign countries. So, here in the General Index for the Annotated Code, we immediately get our first indication that the income tax laws may be substantially different than what we have been led to believe is true by our government. Furthermore, if one looks up "Income Tax" under the major heading of "Aliens" in this General Index, one will find nine pages of code sections listed as being applicable, eight of those pages relate to income tax sections relevant to nonresident aliens.
Most people in America believe that income tax first started in America between 1913 and 1916. That is not correct. Income tax first appeared in the law at the beginning of the Civil War, in 1861. The text of the law read:
INCOME DUTY
§ SEC. 89. And be it further enacted, That for the purpose of modifying and reenacting, as hereinafter provided, so much of an act, entitled "An act to provide increased revenue from imports to pay interest on the public debt, and for other purposes," approved fifth of August, eighteen hundred and sixty-one, as relates to income tax;...
The first income tax was an income DUTY, imposed as a duty on revenue derived from foreign IMPORTS; imposed as a FOREIGN TAX DUTY. Duties are collected at the Ports of Entry to a nation, THEY ARE NOT IMPOSED ON DOMESTIC ACTIVITIES.
Also in the 1860s, in 1862, along with the Income Duty of 1861, Congress passed an Act into law that can only, and most accurately, be described as a Federal employment "kickback" agreement. The text of the Act read:
Section 86. Salaries and Pay of Officers and Persons in the Service of the United States, and Passports.
§ SEC. 86. And be it further enacted, that on and after the first day of August, eighteen hundred and sixty-two, there shall be levied, collected, and paid on all salaries of officers, or payments to persons in the civil, military, naval, or other employment or Service of the United States, including senators and representatives and delegates in Congress, when exceeding the rate of six hundred dollars per annum, a duty of three per centum on the excess above the said six hundred dollars; and it shall be the duty of all paymasters, and all disbursing officers, under the government of the United States or in the employ thereof, when making any payments to officers and persons as aforesaid, or upon settling or adjusting the accounts of such officers and persons, to deduct and withhold the aforesaid duty of three per centum, and shall, at the same time, make a certificate stating the name of the officer or person from whom such deduction was made, and the amount thereof, which shall be transmitted to the office of the Commissioner of Internal Revenue, and entered as part of the internal duties; and the payroll, receipts, or account of officers or persons paying such duty, as aforesaid, shall be made to exhibit the fact of such payment.
...[balance of section 86 applied to passports] (emphasis added)
Please note that the ONLY people who are subject to this duty, by clear statutory language, ARE FEDERAL EMPLOYEES. The EFFECT of Section 86 identifies what it really is - a KICKBACK of part of the property agreed, under employment contract, to be paid for the labor of a Federal government employee. By this Act the amount of compensation contractually agreed to was unilaterally diminished by one party to the agreement (Congress), without the consent of the other party (the federal employee). A unilateral change in the employment contract of all persons already in the employ of the Federal government was, and is, not legal, and the conduct of the United States judges for the next 70 years proves it, as they REFUSED to pay this "duty" until after 1932. Thus becoming, according to the IRS, the first "tax protesters" in American history. The Judges understood thaat the result of arranging for the withholding of three percent of the compensation due to Federal government employees under existing contracts was a deprivation of property and liberty without due process of law, which is violative of the Fifth Amendment to the Constitution.
In 1863 Supreme Court Chief Justice Taney sent a letter to the Secretary of the Treasury attacking implementation of Section 86 on the compensation of Federal judges as being unconstitutional. This letter was also published as a Supreme Court decision (157 U.S. 701). In it, Justice Taney states:
"The Act in question, as you interpret it, diminishes the compensation of every judge three percent, and if it can be diminished to that extent by the name of a tax, it may in the same way be reduced from time to time at the pleasure of the legislature." (emphasis added)
Here you can see that the judges understood the effect of this law was a diminishment "by the name of a tax". They knew it was not an actual tax, BUT A FORCED DEBT OBLIGATION. In this country there exists no circumstance under which a person lawfully can be forced to accept a debt against their will. The judges chose to exercise their RIGHT to REFUSE TO ACCEPT THIS DEBT.
The facts presented above were expressed by the Supreme Court in Pollock v Farmer's Loan & Trust Co. in 1895 where they said:
"Subsequently, in 1869, .... The question arose whether the law which imposes such a tax upon them was constitutional. The opinion of the Attorney General thereon was requested by the Secretary of the Treasury. The Attorney General, in reply, gave an elaborate opinion advising the Secretary of the Treasury that no income tax could be lawfully assessed and collected upon the salaries of those officers who were in office at the time the statute imposing the tax was passed, holding on this subject the views expressed by Chief Justice Taney. His opinion is published in Volume XIII of the Opinion of the Attorney General, at page 161. I am informed that it has been followed ever since without question by the department supervising or directing the collection of the public revenue." (emphasis added)
The "kickback" program illegally forced a three percent debt obligation upon Federal government employees working under an existing employment agreement in 1862. However the "kickback" program established by Section 86 was legal when applied to the salary of persons who took employment with the Federal government after the Act was passed because they were on notice that a three percent kickback was part of their employment agreement.
This “tax” (notice that it is not even called a tax in the Act, but a “Duty”), ONLY APPLIES TO FEDERAL EMPLOYEES. It is these two acts from the 1860's, the Foreign Income Duty and the Federal employment agreement "kickback", blurred under the 16th Amendment distractions, whose provisions have been intentionally mingled by the IRS with the Social Security provisions of the 1930’s, that have become today's so-called income tax, NOT BY PROPER CHANGES IN THE LAW, but by improper enforcement procedure by a renegade IRS, brutally and illegally intimidating, coercing and persecuting good American Citizens by threat, in order to force them to pay a so called "income tax" that they LEGALLY NEVER OWED in the first place (as we will see), because they were never subject to it under the law because they never worked for the Federal government or earned foreign income under treaty !!!
If we look at what the IRS tells us today about income taxes on the first page of the Form 1040 Tax Instruction Booklet from 1994, we find a "Note From the Commissioner", which is usually one of the first things in the booklet. This one is from Margaret Richardson, the current Commissioner of the IRS. It states in part:
Dear Taxpayer,
Thank you for making this nation's tax system the most effective system of voluntary compliance in the world. The key to maintaining that system is ensuring that you are treated fairly and equitably, that your privacy is protected, and that our tax system is as simple and understandable as possible....
Margaret Milner Richardson
There it is! Voluntary Compliance. Why does she say that ? What does that mean ? Does that seem strange to you, given the IRS’s known position in court ? And how does it effect you, a sovereign American Citizen, if compliance really is voluntary ? We will come back to those questions in a bit, but I would point out here that this opening statement is not unusual. Nearly every instruction booklet from past years has opened with some variation of this statement from the Commissioner.
The next thing we’re going to take a look at is the Privacy Act & Paperwork Reduction Act, Notice 609, which is required by law to be supplied to you by the IRS with any correspondence you receive from the IRS. It states in pertinent part:
Privacy Act and Paperwork Reduction Act
The Privacy Act of 1974 and Paperwork Reduction Act of 1980 say that when we ask you for information, we must first tell you our legal right to ask for the information, why we are asking for it, and how it will be used. We must also tell you what could happen if we do not receive it and whether your response is voluntary, required to obtain a benefit, or mandatory under the law.
This notice applies to all papers you file with us, including this tax return. It also applies to any questions we need to ask you so we can complete, correct, or process your return; figure your tax; and collect tax, interest, or penalties.
Our legal right to ask for information is Internal Revenue Code sections 6001, 6011, and 6012(a) and their regulations. They say that you must file a return or statement with us for any tax you are liable for. Your response is mandatory under these sections.........
We ask for tax return information to carry out the tax laws of the United States. We need it to figure and collect the right amount of tax............
If you do not file a return , do not provide the information we ask for, or provide fraudulent information, the law says that you may be charged penalties and, in certain cases, you may be subject to criminal prosecution..........
Please keep this notice with your records. It may help you if we ask for other information. If you have questions about the rules for filing and giving information, please call or visit any Internal Revenue Service office.
In the third paragraph it states:
"Our legal right to ask for information is Internal Revenue Code Sections 6001, 6011 & 6012(a) and their regulations. They say that you must file a return or statement with us for any tax you are liable for."
Now does that say you have to file a return for taxes that you are not liable for ? No! Does it state who is liable ? No! Does it even state what liability is ? No ! And that raises the legal questions, what is liability, and who is liable? We will come back to these questions.
Now keep in mind that this does not actually say that this is their right to ask you (the Citizen) for information. It doesn't actually specifically say from whom information may be requested, it just establishes that a legal right to request information does exist. But from whom may information actually be requested under these laws ? Well, they cite three code sections in this notice, what do they say ?
§ 6001. Notice or regulations requiring records, statements, and special returns.
Every person liable for any tax imposed by this title or for the collection thereof, shall keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary may from time to time prescribe. Whenever in the judgment of the Secretary it is necessary, he may require any person, by notice served upon such person or by regulations, to make such returns, render such statements or keep such records as the Secretary deems sufficient to show whether or not such person is liable for tax. The only records which an employer shall be required to keep under this section in connection with charged tips shall be charge receipts, records necessary to comply with section 6053(c), and copies of statements furnished by employees under section 6053(a).
(emphasis added)
Notice that the first three words in this code section are: “Every person liable”. Does this code section actually establish liability ? Or, does it simply list the consequences of being liable, leaving the reader to assume that he or she is in fact made liable elsewhere in the Code. Indeed it does not establish liability, it merely lists the consequences of being liable. It is interesting to note, that the second sentence here says:
"Whenever in the judgment of the Secretary it is necessary, he may require any person, by notice served upon such person or by regulations, to make such returns, render such statements or keep such records as the Secretary deems sufficient to show whether or not such person is liable for tax."
Have you ever received notice from the Commissioner ? Are you sure that you’re required to make such returns, render such statements or keep such records ? Which records, which statements, and which returns are required ? Do you see in the third sentence where it refers to "employers". Does this code section apply to employers ? Are employers liable for tax ? (see Section 3403 - Liability for Tax)
Section 6011 was the next section cited in Notice 609 by the IRS as their right to request information, and it says:
§ 6011. General requirement of return, statement, or list.
(a) General rule.
When required by regulations prescribed by the Secretary any person made liable for any tax imposed by this title, or with respect to the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary. Every person required to make a return or statement shall include therein the information required by such forms or regulations........... (emphasis added)
The first sentence states in pertinent part:
"... any person made liable...”
Does this code section actually make anyone liable, or again, does it just list the consequences of being made liable, leaving the reader to assume or presume, again, that liability exists, or is actually established elsewhere in the code ? Neither of these code sections, 6001 nor 6011, actually establish liability. They simply establish the consequences of being liable, or being made liable. So, we’re going to look for Code sections that do state some person is liable, or is made liable for the payment of "income" tax, that would trigger the filing requirements established by these sections.
The last section referenced by the IRS in Notice 609, as their right to ask for information, Section 6012, states in pertinent part:
§ 6012. Persons required to make returns of income.
(a) General rule. Returns with respect to income taxes under subtitle A shall be made by the following:
(1)(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount, except that a return shall not be required of an individual -
(i) who is not married, is not a surviving spouse, is not a head of a household and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual.
(ii) who is a household and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual.
(iii) who is a surviving spouse and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual.
(iv) who is entitled to make a joint return and whose gross income, when combined with the gross income of his spouse, is, for the taxable year, less than the sum of twice the exemption amount plus the basic standard deduction applicable to such a joint return, but only if such individual and his spouse, at the close of the taxable year, had the same household as their home.
This section states
“Returns with respect to income taxes under Subtitle A ...”
and Subsection (1)(A) says, “every individual having for the taxable year...”
So, the requirement identified here is being established for individuals under Subtitle A. But, where is the tax imposed on individuals that would correspond to this filing requirement, and what is the exact legal nature of the specific requirement that is established by this section (6012) in conjunction with the imposing statute ? This Code section (6012) may appear to be related to individuals and a corresponding filing requirement (for Returns), but what are its legal limitations, as recorded in the law, and who are the individuals subject under subtitle A ?
Structural Organization of Title
First, a short explanation regarding the organization of the Tax laws in the United States Code. The tax law of the United States of America is in Title 26 of the United States Code (Internal Revenue Code). Title 26 is broken into a number of Subtitles, each Subtitle being a distinct and separate section of the law as the table below shows:
Tax or Topic Subtitle Chapters Sections
--------------------- ------- --------- ----------
Income Taxes A 1 to 6 1
Estate & Gift Taxes B 11 to 13 2001
Employment Taxes C 21 to 25 3101
Miscellaneous Excises D 31 to 47 4041
Alcohol, Tobacco and
Certain Other Excises E 51 to 54 5001
Procedure and
Administration F 61 to 80 6001
Joint Committee on
Taxation G 91 to 92 8001
Financing Presidential
Election Campaigns H 95 to 96 9001
Trust Fund Code I 98 9500
This book examines the laws under Subtitle A - Income taxes, Subtitle C - Employment taxes, and Subtitle F - Procedure and Administration, which applies and implements the other Subtitles under the law. The code sections we just looked at 6001, 6011 and 6012 are all from Subtitle F. Income taxes are in Subtitle A, consisting of chapters 1 - 6 of Title 26, Employment taxes are in Subtitle C, consisting of chapters 21 - 25.
It is important to understand that each Subtitle establishes a distinct and separate program, or "tax", with its own individual authority to administer within that Subtitle, over its code sections. These authorities do not automatically cross over into the other Subtitles and cannot be invoked as an authority in the other Subtitles unless it is shown as applicable within the law and its provisions (regulations).
Each Subtitle imposes its own tax, and establishes the groups of persons subject to that tax, within that specific subtitle. Just because one group of people is subject to one tax under one subtitle, does not necessarily imply that group is automatically also subject to the taxes imposed by other subtitles. To demonstrate this point one could ask "Do you pay Subtitle E taxes ?". For most people, the answer is a resounding "NO". Why not, you may ask, isn't everyone subject to the law? The answer, of course, is that the group of persons subject to Subtitle E taxes are ONLY those people who engage in the manufacture and sale of alcohol and tobacco products, as proscribed in Subtitle E.
As you will see, the group of people who are subject to the Subtitle C Employment Tax laws are those people who have voluntarily chosen to participate in the Social Security program and supply a Social Security number. Who then, is the subject of the Subtitle A - Income Tax laws, and what exactly is the true nature of this tax and its associated filing requirements ? Well, Section 6012 said: “... with respect to income taxes under Subtitle A ...", and we are looking for the Code section where the income tax is imposed on individuals, so, we go to Title 26, Subtitle A, Chapter 1, Section 1, which states:
SUBTITLE A - INCOME TAXES
Chapter 1. - NORMAL TAXES AND SURTAXES
Subchapter A. - Determination of Tax Liability
PART 1. - Tax On Individuals
(a) Married individuals filing joint returns and surviving spouses. There is hereby imposed on the taxable income of -
(1) every married individual (as defined in Section 7703) who makes a single return jointly with his spouse under Section 6013, and
(2) every surviving spouse (as defined in Section 2(a)), a tax determined in accordance with the following table:
If taxable income is: The tax is:
Not over 32,450 15% of taxable income
Over 32,450 but not
over 78,400 4,867.50, plus 28% of
the excess over 32,450
Over 78,400 17,733.50, plus 31% of
the excess over 78,400
(b) Heads of households. There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table:
If taxable income is: The tax is:
Not over 26,050 15% of taxable income
Over 26,050 but not
over 67,200 3,907.50, plus 28% of
the excess over 26,500
Over 67,200 15,429.50, plus 31% of
the excess over 67,200
(c) Unmarried individuals (other than surviving spouses and heads of households). There is hereby imposed on the taxable income of every individual ( other than a surviving spouse as defined in section 2(a) of the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table:
If taxable income is: The tax is:
Not over 19,450 15% of taxable income
Over 19,450 but not
over 47,050 2,917.50, plus 28% of
the excess over 19,450
Over 47,050 10,645.50, plus 31% of
the excess over 47,050
(d) Married individuals filing separate returns There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who does not make a single return jointly with his spouse under section 6013, tax determined in accordance with the following table:
If taxable income is: The tax is:
Not over 16,225 15% of taxable income
Over 16,225 but not
over 39,200 2,433.75, plus 28% of
the excess over 16,225
Over 39,200 8,866.75, plus 31% of
the excess over 39,200
(e) Estates and trusts. There is hereby imposed on the taxable income of -
(1) every estate, and
(2) every trust,
taxable under this subsection a tax determined in accordance with the following table:
If taxable income is: The tax is:
Not over 3,300 15% of taxable income
Over 3,300 but not
over 9,900 495 , plus 28% of
the excess over 3,300
Over 9,900 2,343 plus 31% of
the excess over 9,900
(f) Adjustments ...........
Does all of this look familiar ? It should, this is the Income Tax you probably pay every April 15th of every year, and it sure looks like everyone has to pay, doesn't it ?
But wait, notice that the language in each of the paragraphs of this section reads in the form:
“...there is hereby imposed on the taxable income ... a tax ...”.
Notice that in all of these paragraphs the tax is not actually imposed on the individual him or herself, it is imposed on the taxable income of the individual. So, that leads to the question, what is taxable income, and what makes income taxable, as opposed to non-taxable ? What everybody in America apparently does: is assume that they have taxable income, and then assume that they have liability for tax, and then they assume that Form 1040 is the correct form to file to satisfy that liability for tax on taxable income that they have as individuals, So they fill out Form 1040 and send it in to the IRS to pay the tax. But, is that the correct and proper legal procedure to follow under the law ? Certainly that is what the IRS tells us to do, but what does the law actually say. What information is legally required from U.S. Citizens to satisfy the statutory liability for tax on taxable income established in Chapter 1, Section 1, by the (income) tax imposed ?
For the answer to that question we must go back to the Paperwork Reduction Act, but first, a small note (code section).
Most people believe that Section 1 is all there is in the law regarding the imposition of the income tax. But what about this next section from Title 4 - Rules For Federal Employees.
4, U.S.C. § 111. State, and so forth, taxation affecting Federal areas; taxation affecting Federal employees; income tax.
The United States consents to the taxation of pay or compensation for personal service as an officer or employee of the United States, a territory or possession or political subdivision thereof, the government of the District of Columbia, or an agency or instrumentality of one or more of the foregoing, by a duly constituted taxing authority having jurisdiction, if the taxation does not discriminate against the officer or employee because of the source of the pay or compensation.
Here Congress is consenting to the taxation (kickback return) of the pay of Federal officers and employees in the name of income tax. There is no such corresponding statute anywhere in the code for anyone who DOES NOT WORK FOR THE FEDERAL GOVERNMENT. In this law, the U.S. government is providing notice that ONLY the employees of the U.S. government (United States), who are receiving the U.S. government's property (in the form of wage payments to those employees), which is subject to being returned (kick-backed) to the government, are responsible for those returns of income (referenced in 6012), to the government as part of their employment agreement. This section is in Title 4 BECAUSE IT ONLY APPLIES TO GOVERNMENT EMPLOYEES and cannot apply to anyone else. Congress cannot enact law for any other taxing authority (like a State), or in any area where it does not have territorial jurisdiction. Only government employees are responsible for returning a portion of their income to the Federal government (IRS), NOT Citizens in the fifty States WHO DO NOT WORK FOR THE FEDERAL GOVERNMENT.
THE PAPERWORK REDUCTION ACT
Now, the Paperwork Reduction Act effectively says that the United States government cannot require, or collect, more information from Citizens than is absolutely necessary to satisfy the requirements of the law. And under this Act, which was passed in 1980, the IRS was required to file with OMB, the Office of Management and Budget, a list of all the code sections that required information to be collected from individuals, together with the cross-referenced list of forms to be used to satisfy those legal information collection requirements for any given code section.
This table is incorporated into the law in the Code of Federal Regulations in 26 C.F.R. 602.101, whose introduction states that the purpose of this regulatory section is to comply with the legal requirements imposed on the government by the Paperwork Reduction Act. The IRS itself prepared and supplied this Table to OMB. It took the IRS five years to comply with the mandate of this Act to document the specific filing requirements associated with any given section, and after you see the table you will understand why the IRS did not want to release this information for over five years.
It states in pertinent parts:
PART 602 - OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Section 602.101. OMB Control numbers.
(a) Purpose.. This part collects and displays the control numbers assigned to collections of information in Internal Revenue Service regulations by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1980. The Internal Revenue Service intends that this part comply with the requirements of .... (OMB regulations implementing the Paperwork Reduction Act), for the display of control numbers assigned by OMB to collections of information in Internal Revenue Service regulations....
_________________________________________________
26 CFR (4-1-94 Edition)
CFR part or section where Current
identified and described OMB Control No.
1.1-1 ........................................... 1545-0067
1.23-5 ...........................................1545-0074
1.25-1T.........................................1545-0922
1545-0930
1.25-2T..........................................1545-0922
.....
1.60120....................................... 1545-0067
1.6012-1...................................... 1545-0074
........
In the portion of the table reproduced above, the left hand column shows the code section (where the income tax is imposed; in PART 1, Section 1, designated here in the table as 1.1-1), and the right hand column shows the OMB Document Control Number (DCN) assigned to the information collection request (the form), that is required by the code section to satisfy its legal requirements. Note that there is only one form shown here as being required by the law that imposes the income tax, and note that the form that is to be used to satisfy the requirements of this code section, where the income tax is imposed, carries OMB DCN 1545-0067. Also note that the same form is required by Regulation 1.6012-0, which corresponds to the individual's filing requirement established in Section 6012, which has already been reviewed.
It should be noted that 6012 (from Subtitle F - Procedure and Administration) is used to enforce all of the individual filing requirements established and imposed in the other Subtitles, but it does not expand or establish any new or additional requirements in association with any given section. So, while 1.6012-1 can be used to enforce (and require) the use of Form 1040 in association with those sections that actually do require it (1.23-5 for example), IT DOES NOT AND CANNOT EXPAND THE REQUIREMENT OF SECTION 1, as shown in the above CFR table. It can properly be used to enforce the requirement(s) shown, but it cannot expand them.
So, if Form 1040 is the proper form for United States Citizens to file to satisfy their liability on taxable income, under the law, as listed by the IRS; that OMB Document Control Number, 1545-0067, will show up on the top of a Form 1040.
|
Department of the Treasury - Internal Revenue Service Form 1040 U.S. Individual Income Tax Return 1993 | Reserved for IRS Use Only. For the year Jan 1-Dec 31, 1993, or other tax year beginning , 1993 ending ,19 | OMB No. 1545-0074 ------------------------------------------------------------------------------------------------------------ |
Here is the reproduced top portion of a Form 1040 from 1993, and there in the upper right hand corner, it says OMB No. 1545-0074. Does that number match the number shown in the table as being required by Section 1 that imposes the tax ? No ! It’s the wrong number! The Table in the Code of Federal Regulations shows that the law requires the form with OMB Document Control Number 1545-0067, not 1545-0074.
It’s probably worth saying that 1545 is the prefix assigned by OMB to all IRS documents. But OMB Document Control Number 1545-0074 is assigned to Form 1040, and the form required by the law carries DCN 1545-0067. So what form does carry the OMB Document Control Number 1545-0067 ?
|
Form 2555 Foreign Earned Income |OMB No. 1545-0067 __________________________________________________________________________________ For Use by U.S. Citizens and Resident Aliens Only 1993 ------------------------------------------------------------------------------------------------------------ |
Here, you see at the top of the form, in the upper right hand corner it says: OMB No. 1545-0067. Now that matches the entry in the CFR Table! And what is the title of this form ? Form 2555 Foreign Earned Income ! And what does it say underneath the title ?
"For Use by U.S. Citizens and Resident Aliens Only".
Now does Form 1040, say anything about who is supposed to use it ? No, it doesn’t! But Form 2555 - Foreign Earned Income states who is supposed to use it, “U.S. Citizens and Resident Aliens Only”. This is the form that’s listed in the law as being required to satisfy the information reporting requirements associated with the individual's statutory liability for income tax on "taxable income", imposed by Section 1 in Chapter 1, the income tax; and, it is the same form shown as being required under Section 6012, which was cited by the IRS itself in Notice 609.
I’ll mention that here again, under the law, we find that the income tax, for Citizens, other than the Federal “source” kickback”, appears to be related only to foreign income. Remember we started with the General Index for the United States Code Annotated and found that under Income Tax, under Citizens, it only referenced foreign countries, and here again, we find that the only form actually required under the law, reports only foreign income. The law is consistent so far, isn't it? It doesn't agree with what we are told to believe by the IRS, but it agrees with itself, without contradiction, doesn't it ? So what is the proper legal use of a Form 1040 ? The next document will help explain things.
Income Taxes
Treasury Department
Office of Commissioner of Internal Revenue
Washington, D.C., March 21, 1916
To collectors of internal revenue:
Under the decision of the Supreme Court of the United States in the case of Brushaber v. Union Pacific Railway Co., decided January 21, 1916, it is hereby held that income accruing to nonresident aliens in the form of interest from the bonds and dividends on the stock of domestic corporations is subject to the income tax imposed by the act of October 3, 1913.
Nonresident aliens are not entitled to the specific exemption designated in paragraph C of the income-tax law, but are liable for the normal and additional tax upon the entire net income "from all property owned, and of every business, trade, or profession carried on in the United States," computed upon the basis prescribed in the law.
The responsible heads, agents, or representatives of nonresident aliens, who are in charge of the property owned or business carried on within the United States, shall make a full and complete return of the income therefrom on Form 1040, revised, and shall pay any and all tax, normal and additional, assessed upon the income received by them in behalf of their nonresident alien principals.
The person, firm, company, copartnership, corporation, joint-stock company, or association, and insurance company in the United States, Citizen or resident alien, in whatever capacity acting, having the control, receipt, disposal, or payment of fixed or determinable annual or periodic gains, profits, and income of whatever kind, to a nonresident alien, under any contract or otherwise, which payment shall represent income of a nonresident alien from the exercise of any trade or profession within the United States, shall deduct and withhold from such annual or periodic gains, profits, and income, regardless of amount, and pay to the office of the United States Government authorized to receive the same such sum as will be sufficient to pay the normal tax of 1 per cent imposed by law, and shall make an annual return on Form 1042. (emphasis added)
This is the only place that I have ever been able to find the proper explanation, actually, any explanation what-so-ever from the United States government, for the proper use of Form 1040. Treasury Decision 2313, handed down in 1916, instructs the collectors of the Internal Revenue on how to implement the income tax laws as imposed under the 16th Amendment. This Treasury Decision is the result of a Supreme Court ruling, referenced in the first paragraph as "Brushaber v. Union Pacific Railway Co", which was decided January 21, 1916, and from which:
"... it is hereby held that the income accruing to nonresident aliens in the form of interest from the bonds and dividends on the stock of domestic corporations is subject to the income tax imposed by the act of October 3, 1913.”
The second paragraph states:
“Nonresident aliens are not entitled to the specific exemption designated in paragraph C of the income-tax law, but are liable for the normal and additional tax upon the entire net income from all property owned, and of every business, trade, or profession carried on in the United States,” computed upon the basis prescribed in the law.”
Now, the first paragraph says that nonresident aliens are subject to the tax. The second paragraph says that nonresident aliens are liable for the tax and that they are not allowed to claim the exemption designated as paragraph C. That implies that Citizens are allowed to claim the exemption in paragraph C, and that Citizens are not liable for the tax, because they are not subject to the tax, because it was not specified in paragraph one that Citizens are subject. Now let’s read the third paragraph, and keep in mind that we are going to look for a Paragraph C in the United States Code that exempts Citizens from income tax. The third paragraph states:
“The responsible heads, agents, or representatives of nonresident aliens, who are in charge of the property owned or business carried on within the United States, shall make a full and complete return of the income therefrom on Form 1040, revised, and shall pay any and all tax, normal and additional, assessed upon the income received by them in behalf of their nonresident alien principals."
Now there’s the proper legal use of Form 1040. It is to be used by United States Citizens to report the income of his or her foreign principals. It is not to be used to report the Citizen's own personal domestic income. Again, this is the only place where I have ever seen a legal explanation from the government for the proper legal use of Form 1040, and now I think you know why. Form 1040 is to be used by withholding agents to report the income of foreign principals. It is not to be used by U.S. Citizens to report their own income, and that’s why voluntary self assessment and voluntary compliance are so important to the IRS. Because the current mythical system doesn’t work unless the Citizen voluntarily misapplies the law and uses the wrong form to mistakenly, voluntarily assess his own domestic income for a foreign income tax. Form 1040 is also properly required to claim certain credits and deductions (discussed later), as well as for Federal employees to utilize in minimizing the “kickback” duty under 4 U.S.C. 111.
This Treasury Decision, 2313, references the Supreme Court decision Brushaber v. Union Pacific Railroad Co., so it is time to step back, and get a little background information.
The first thing we’re going to do is look at what the Constitution says about taxation. The limitations in the Constitution restricting the direct taxation of individuals and their property are found in Article 1 in two different sections. Both sections specifically restrict the Federal government as to how it may lay direct taxes on the Citizens. Article 1, Section 2, Clause 3 states:
"Representative and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers"
and Article 1, Section 9, Clause 4 states:
"No capitation or other direct tax shall be laid, unless in apportionment to the Census or enumeration herein before directed to be taken."
These basic sections of the Constitution have never been repealed or amended. The Constitution still forbids the direct taxation of individuals, their property, and their rights, unless the tax is apportioned to the State governments for collection.
And Article 1, Section 10, Clause 1 states:
“No State shall enter into any treaty, alliance, or confederation; grant letters of marquee and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.” (emphasis added)
This Clause in the Constitution is why NEITHER the Federal, nor the State governments have any legal authority over, or to UNILATERALLY ALTER, PRIVATE EMPLOYMENT CONTRACTS as stated in Justice Taney’s letter (recorded as a Court Decision).
In 1895, Congress tried to pass an Act that imposed income taxes on the interest and dividends of U.S. Citizens on deposit in U.S. banks. This Act was immediately struck down in Pollock vs. Farmer’s Loan and Trust Co. (157 US 429), wherein the Supreme Court ruled that it is unconstitutional to impose an income tax on the interest and dividends of United States Citizens on deposits in U.S. banks. The court ruled that the tax was unconstitutional because it was a direct tax that was not apportioned as required by the Constitution. This decision has never been reversed or overturned.
Excerpts from the Pollock decision include:
"...Ordinarily, all taxes paid primarily by persons who can shift the burden upon someone else, or who are under no legal compulsion to pay them, are considered indirect taxes; but a tax upon property holders in respect of their estates, whether real or personal, or of the income yielded by such estates, and the payment of which cannot be avoided, are direct taxes..." (emphasis added)
and,
"...Subsequently, in 1869, .... The question arose whether the law which imposes such a tax upon them was constitutional. The opinion of the Attorney General thereon was requested by the Secretary of the Treasury. The Attorney General, in reply, gave an elaborate opinion advising the Secretary of the Treasury that no income tax could be lawfully assessed and collected upon the salaries of those officers who were in office at the time the statute imposing the tax was passed, holding on this subject the views expressed by Chief Justice Taney. His opinion is published in Volume XIII of the Opinion of the Attorney General, at page 161. I am informed that it has been followed ever since without question by the department supervising or directing the collection of the public revenue..." (emphasis added)
and;
"...A tax upon one's whole income is a tax upon the annual receipts from his whole property, and as such falls within the same class as a tax upon that property, and is a direct tax, in the meaning of the Constitution..."
(emphasis added)
and,
"...We have unanimously held in this case that, so far as this law operates on the receipts from municipal bonds , it cannot be sustained, because it is a tax on the powers of the States, and on their instrumentalities to borrow money, and consequently repugnant to the Constitution. ..it follows that, if the revenue from municipal bonds cannot be taxed because the source cannot be, the same rule applies to revenue from any other source not subject to the tax; and the lack of power to levy any but an apportioned tax on real and personal property equally exists as to the revenue therefrom. (emphasis added)
Admitting that this act taxes the income of property irrespective of its source, still we cannot doubt that such a tax is necessarily a direct tax in the meaning of the Constitution In England, we do not understand that an income tax has ever been regarded as other than a direct tax. In Dowell's History of Taxation and Taxes in England, given, and an income tax is invariably classified as a direct tax.." (emphasis added)
and, even in dissent:
..that personal property, contracts, obligations, and the like, have never been regarded by Congress as proper subjects of direct tax. The United States Constitution provides Congress the power to lay and collect taxes directly only as long as it is apportioned with regard to the census or enumeration."
(emphasis added)
Then, in 1913 Congress passed the 16th Amendment which says,
“Congress shall have power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”
So that changed everything, right? Well, NO ! That is not what the Supreme Court ruled. What the Supreme Court ruled, in Brushaber v. Union Pacific R.R. Co. and in Stanton v. Baltic Mining Co., is that since the provisions of Article I, requiring that direct taxes be apportioned, were not repealed, they are still in full force and effect. And, that since the language of the 16th Amendment specifies that the income tax is to be a tax without apportionment, then it cannot be a direct tax, because otherwise the Constitution would inherently contradict itself, which cannot be allowed to happen. Article I cannot prohibit direct taxation unless apportioned, while the 16th Amendment grants the power to lay direct taxes without apportionment, because then the Constitution would inherently contradict itself and could no longer serve as a valid foundation for our Law. So, to specifically prevent the Constitution from contradicting itself, the Supreme Court ruled that since the 16th Amendment provides for an income tax without apportionment, then the income tax cannot be a direct tax., since direct taxes MUST be apportioned (per Article 1, twice mandated).
But, there are only two major classes of taxation authorized in the Constitution; direct taxes and indirect taxes. So, if the income tax cannot be a direct tax, then it must be an indirect tax. Indirect taxes are classified into three minor categories in the Constitution: imposts, duties and excises, and are ONLY imposed on revenue taxable activities and/or events. If you remember, the income tax started in 1861 as an income Duty, imposed only on foreign imports and Federal employees, which was contained and allowed within the Constitutional category of duties. As a foreign duty it was only imposed on the flow of foreign goods into America, NOT DOMESTIC GOODS, NOR DOMESTIC INCOME derived from domestic activities, except those earnings earned by federal employees and officers from federal sources.
Obviously today, the income tax is not currently being enforced as a duty, so the questions are: "Did the 16th Amendment create a new congressional power to tax directly ?", and; "How did the 16th Amendment change the income tax ?".
The answer to the first question was supplied by the Supreme Court in Stanton v. Baltic Mining Co., 240 US 112 (1916), stating:
"...by the previous ruling, it was settled that the provisions of the 16th Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged.." (emphasis added)
The Supreme Court clearly states that the 16th Amendment DID NOT create a new power to tax the People in a direct fashion without apportionment, AS IS FRAUDULENTLY CLAIMED BY THE IRS. So, if it is not a direct tax, then it is still an indirect tax, but, possibly, no longer a duty. Then; "What kind of tax is the income tax now?" In the "previous ruling" referenced above, Brushaber v. Union Pacific R.R. Co . 240 US 1 (1916), the court stated:
"...taxation on income was in its nature an excise ...” ,and
"...taxes on such income had been sustained as excises in the past...".
specifically,
"Moreover, in addition, the conclusion reached in the Pollock case did not in any degree involve holding that income taxes generically and necessarily came within the class of direct taxes on property, but, on the contrary, recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such unless and until it was concluded that to enforce it would amount to accomplishing the result which the requirement as to apportionment of direct taxation was adopted to prevent, in which case the duty would arise to disregard form and consider substance alone,..." (emphasis added)
The Court ruled that the 16th Amendment effectively transformed the income tax from an indirect duty to an indirect excise (imposed on revenue taxable ativities) It is not a direct tax without apportionment. And, if we examine the law closely, that is exactly what we find; that the income tax is imposed and applied under the law, as an indirect excise, ONLY imposed on specific entities, privileged and Federal, and specific taxable activities and events that are identified in the law as “included types” or potential “sources” of “taxable income”
So, legally, exactly what is an excise tax ? Fortunately, the Supreme Court used to know what it was doing, and both of these decisions, Brushaber and Stanton, refer you to another case handed down five years earlier, Flint v. Stone Tracy Co 220 U.S. 107 (1911) , in which the Supreme Court ruled that excise taxes are taxes:
“laid on the manufacture, sale or consumption of commodities within the country,
upon licenses to pursue certain occupations and
upon corporate privileges;
the requirement to pay such taxes involves the exercise of the privilege and if business is not done in the manner described no tax is payable...it is the privilege which is the subject of the tax and not the mere buying, selling or handling of goods.” (emphasis added)
The Supreme Court effectively establishes with this ruling that excise taxes are manufacturing taxes, sales taxes, and taxes on privileges. Privileges in the form of either licenses to pursue certain occupations, corporate privileges, and any other privileges granted to the individual by the government as well. One of these other privileges, is the privilege of being protected by the United States government in a foreign country under a tax treaty The government normally would have no jurisdiction or ability to protect you or your business interests in a foreign country, but because of the existence of the tax treaty with that foreign government, your business is protected by the U.S. government outside their jurisdictional boundaries (the United States). That protection, being afforded by the tax treaty, is construed to be a privilege granted to you by the government; and therefore, the income earned in that foreign country under the tax treaty, is privileged income and subject to the income tax.
And that is why the General Index shows that there are only two code sections that apply to Citizens, both having to do with foreign countries. And that is why the form that is actually required by the law is Form 2555 - Foreign Earned Income. Because that is the privileged income that you have as "taxable income", upon which you have liability to satisfy, resultant from engaging in a revenue taxable activity. And that is the only filing requirement that you have as an individual American Citizen under the law. If you have no foreign earned income under tax treaties and no foreign principals to whom money is paid, then you don’t have to file anything under the letter of the law because other income, domestic income, is earned by Right, not privilege. It is a long and well established rule of law that the government cannot tax your Rights, nor may it tax the proceeds derived from the simple exercise of those Rights, and the law accurately reflects and captures that Constitutional truth. It is the IRS that ignores the truth, ignores the law, ignores the implementing regulations and tramples your Citizen's Rights into the mud, because, as you will see, their actions are certainly not supported by the law, or even properly, legally authorized under it.
There is no requirement to file a Form 1040 reporting your own domestic income because the form is only supposed to be used by non-resident aliens and those U.S. Citizens who serve as "withholding agents" to aliens and who have foreign principals to whom moneys are being paid, and Federal employees returning property to the national Treasury. As the "agents" for those foreign principals, Citizens are required to deduct and withhold and pay the income tax, not on their own income, but on the income of the foreign principals, who do not possess the same rights as a Citizen. As Federal employees, they are “transferees” under the I.R. Code and subject to making a “return of income” to the U.S. Treasury.
Now, the reason why these facts are so little known in America, and in the legal community itself, is that if you just look up the Brushaber v. Union Pacific R.R. Co. decision and read it quickly, it appears that the Supreme Court tells the U.S. Citizen (Brushaber) that the tax is constitutional and he has to pay it. It reads as if the Citizen is being told by the Court that he has to pay the income tax. But, the fact of the matter is Frank Brushaber was the U.S. agent for a group of foreigners who had stock in the Union Pacific Railroad. Under the 16th Amendment he (Brushaber) and the Union Pacific Railroad were both made withholding agents and were both ordered by the government to deduct, withhold and pay over the income tax to the government, on the foreigners' income from the stock.
Now, Frank Brushaber filed this suit on behalf of his foreign principals, who had no standing as foreigners in the U.S. courts to file themselves, and that is why Brushaber's name is on the decision. The foreigners lost the suit. The foreigners were essentially told by the courts that it was a privilege to be allowed to have access to the United States marketplace and earn income there. That privilege is granted by the U.S. government, which is given, in the Constitution, full authority over foreigners in America and foreign affairs with other nations. The Court determined that it is the U.S. government that allows foreigners the privilege of earning money in America, therefore; any income that they earn under that extended privilege is taxable income, and the Citizen who acts as the foreigner's agent has to withhold and pay the income tax to the federal Government. In this case the Citizen essentially got told by the court that you have to pay the tax because you’re the withholding agent for these foreigners upon whom the income tax is imposed. The first sentence of the case “write-up” clearly states that the decision is about TARRIFF LAWS.
But the decision simply isn’t written up so that it’s clear about the circumstances of the case. You have to research it thoroughly. If you just look it up, it looks like the U.S. Citizen, Frank Brushaber, gets told by the government, "the tax is Constitutional, and you have to pay it", and, over the passage of time, the IRS has found it very easy to deceive the American people as to the true nature of this Supreme Court decision because of the way this decision is written. In fact, if you call the IRS and ask them why the income tax is Constitutional, they will answer that the Supreme Court ruled it was Constitutional in Brushaber v. Union Pacific Railroad Co. But they won't tell you that this was a case about tarriff laws and the taxation of foreigners, AND HAS ABSOLUTELY NOTHING TO DO WITH THE DIRECT TAXATION OF CITIZENS, as fraudulently claimed by the IRS for over 60 years. So that everyone understands this, it should be said that Title 15 U.S.C. § 17, states:
§ 17 Anti-trust laws... ...
The labor of a human being is not a commodity or article of commerce...
and therefore cannot be made subject to any indirect excise tax as though it were such. Finally, from the Congressional Research Service in 1979:
SOME CONSTITUTIONAL QUESTIONS
REGARDING THE FEDERAL INCOME TAX LAWS
By
Howard Zaritsky
Legislative Attorney
American Law Division
May 25, 1979
Report No. 79-131 A
... In Brushaber v. Union Pacific R.R. Co. (1916), the Supreme Court held that the income tax , including a tax on dealings in property, was an indirect tax, rather than a direct tax, and that:
"the command of the amendment that all income taxes shall not be subject to the rule of apportionment by a consideration of the source from which the taxed income may be derived forbids the application to such taxes of the rule applied in the Pollock case by which alone such taxes were removed from the great class of excises, duties, and imposts subject to the rule of uniformity and were placed under the other or direct class." 240 U.S. 1 18-19 (1916)
This same view was reiterated by the Court in Stanton v. Baltic Mining Co. (1916) in which the court stated that the:
"Sixteenth Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged." 240 U.S. 112 (1916)
Therefore, it is clear that the income tax is an "indirect" tax of the broad category of "Taxes, Duties, Imposts and Excises," subject to the rule of uniformity, rather than the rule of apportionment......
CHAPTER 2
Chapter 79, from Subtitle F - Procedure and Administration, contains many of the legal definitions for the terms used in Title 26. Specifically Section 7701, which states.
§ 7701 Definitions.
(a). When used in this Title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof--
(1). Person - The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
...
(3) Corporation. The term “Corporation” includes associations; joint stock companies, and insurance companies.
(4) Domestic. The term “domestic” when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or of any State.
(5) Foreign. The term “foreign” when applied to a corporation or partnership means a corporation or partnership which is not Domestic.
...
(9). United States. The term ''United States'' when used in a geographical sense includes only the States and the District of Columbia.
(10) State. The term ''State'' shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title. ...
(26). Trade or business. - The term "trade or business" includes the performance of the functions of a public office.
...
(30). United States person. - The term "United States person" means-
(A) a citizen or resident of the United States,
(B) a domestic partnership
(C) a domestic corporation, and
(D) any estate or trust (other than a foreign estate or foreign trust , within the
meaning of section 7701(a)(31)).
(31). Foreign estate or trust. - The terms "foreign estate" and "foreign trust" mean an estate or trust, as the case may be, the income of which from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, is not includible in gross income under Subtitle A.
First note that the word "person" is not restricted to meaning just people. For purposes of the application of the tax laws, "person" means any entity subject to the tax laws. Next, notice that the definition of Domestic (4) references “any State”, and the definition of State (10) says that it includes (only) the District of Columbia.
Additionally, if one examines the statutory evolution of the definition of the word "State" in the I.R. Code, one finds in the 1939 I.R. Code (when Hawaii and Alaska were Territories) the following:
§ 3797 (a)(10). State. The term "State shall be construed to include the Territories and the District of Columbia, where such construction is necessary to carry out the provisions of this title. (emphasis added)
In the 1954 recodification of the I.R. Code (after Alaska became a State and Hawaii is still a territory), § 3797(a) was moved to § 7701(a), where we find:
§ 7701 (a)(10). State. The term "State shall be construed to include the Territory of Hawaii and the District of Columbia, where such construction is necessary to carry out the provisions of this title. (emphasis added)
And finally, in 1959 (after Hawaii became a State), the definition in the Code for the word "State" was updated, and now we find:
§ 7701 (a)(10). State. The term "State shall be construed to include the District of Columbia, where such construction is necessary to carry out the provisions of this title. (emphasis added)
Which is how the statute stands today. Clearly the 50 States of the union are omitted. Lest there be any question that Congress is capable of including the States in this sort of definition where it intends to, one should note carefully the statutory definition provided at 26 U.S.C. § 6103(b)(5) for "State", which does include the several (50) states.
§ 6103(b)
...
(5) State
The term "State" means -
(A) any of the 50 States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, the Canal Zone, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands, and
(B) ....
This indicates that any entity in one of the fifty States of the Union is outside (not covered by) the jurisdiction established by this Code for the purposes of applying and properly understanding the internal revenue laws. Citizens are not under the direct territorial jurisdiction of the U.S. government, but rather, are under the jurisdiction of the STATE government, NOT THE FEDERAL. NOW THIS DOES NOT mean that you are a non-resident alien. It just means that you are a Sovereign American Citizen WHO IS OUTSIDE AND ABOVE THE FEDERAL ABILITY (and territorial jurisdiction) TO DIRECTLY TAX, and therefore is not subject to the control, or rule, or taxation of the Federal government on your domestic activities engaged in by Right.
Because of these definitions, and others, there seems to be a lot of confusion and conflicting works by authors making claims regarding these definitions and others specifically, "State" and "United States", AND "Citizen" and "nonresident alien". Many books and articles in the Patriot community in America today claim that since the legal definition of the term "United States" appears to NOT include the 50 States, because the term “State” does not actaully include the 50 states, then Citizens of the 50 States are technically not Citizens of the United States under the IR Code, and therefore are not subject to the income tax, because the tax is only imposed on a citizen of the United States (areas of Federal jurisdiction). Thus a Citizen of a State is a non-resident alien for purposes of the tax code, and is not subject. As already explained and shown in great detail, this argument is fatally flawed. As we have alreaday seen, NON RESIDENT ALIENS ARE THE ACTUAL SUBJECT, AND ONLY SUBJECT, OF THE INCOME TAX under the 16th Amendment (besides federal employees) ! If you declare yourself to be a nonresident alien, you are declaring yourself to be subject to the tax. It will just be a matter of time before the IRS shows up at your door demanding that YOU, THE ALIEN (according to your own declaration), pay the tax. This is a destroyed legal argument and cannot succeed in the courts.
This confusion results from the fact that THERE ARE MULTIPLE DEFINITIONS for these terms contained in the law. However, each definition is specifically attached to, and relevant for, ONLY certain code sections (generally one chapter, or one Code section) referenced in the definition itself. This is the wrong argument to base your legal claims on if you are going to try and take on the IRS in court, IT IS NOT RECOGNIZED. PLEASE DO NOT DEPEND ON THIS LEGAL ARGUMENT OR YOU WILL LOSE.
I further would point out that Citizens CAN VOTE, and ALIENS CANNOT. If you voted (or are registered (or eligible) to vote) THEN YOU ARE OBVIOUSLY A CITIZEN OF THE UNITED STATES, and cannot (and SHOULD not) claim that you are "alien" (resident or otherwise) to the government for the purpose of applying the tax laws (but not the voting laws ?)!
If you want to know how to really beat the IRS, read this whole book and join the Disciples of Truth and the Save a Patriot Fellowship to stay informed; because citizenship is the very best tax umbrella possible - you are not subject, if you exercise your rights, and DON'T volunteer for silly programs.
Furthermore, as pointed out, the Constitution FORBIDS the Federal government from interfering in PRIVATE CONTRACTS, LIKE YOUR EMPLOYMENT CONTRACT IN THE PRIVATE SECTOR. Because the Constitution FORBIDS THIS, the United States government HAS NO UNILATERAL AUTHORITY OVER EITHER YOU, AS AN EMPLOYEE IN THE PRIVATE SECTOR, OR YOUR EMPLOYER, WITHOUT YOUR/THEIR VOLUNTARY COOPERATION AND PERMISSION. As you will see, the law records these legal facts
Finally, we have Title 4 U.S.C. § 72, which states:
§ 72. Public offices; at seat of government.
All offices attached to the seat of government shall be exercised in the District of Columbia, and not elsewhere, except as otherwise expressly provided by law.
And what does the Supreme Court say about Federal jurisdiction in the Territories and 50 States ?
“The laws of Congress in respect to those matters {outside of Constitutionally delegated powers} do not extend into the territorial limits of the States, but have force only in the District of Columbia, and other places that are within the exclusive jurisdiction of the national government.” [Caha v. United States, 152 US 211]
“Constitutional restrictions and limitations were not applicable to the areas of land, enclaves, territories and possession over which Congress had exclusive legislative authority” [Downes v. Bidwell, 182 US 244]
“Special provision is made in the Constitution for the cession of jurisdiction from the States over places where the Federal government shall establish forts or other military works. And it is in these places, or in territories of the United States, where it can exercise a general jurisdiction.” [New Orleans v. United States, 35 US (10 Pet.) 662 (1836)]
“It is well established principle of law that all federal legislation applies only within the territorial jurisdiction of the United States unless a contrary intent appears” [Foley Brothers, Inc. v. Filardo, 336 US 281 (1948)]
“Jurisdiction is essential to give validity to the determinations of administrative agencies and where jurisdictional requirements are not satisfied, the action of the agency is a nullity..” [City Street Improv Co. v. Pearson, 181 C 640, 185 P. (1962) O’Neil v. Dept. of Professional & Vocational Standards, 7 CA2d 393, 46 P2d 234]
“...the commerce clause...has always been understood as limited by its terms; and as a virtual denial of any power to interfere with the internal trade and business of the separate states” [United States v. DeWitt, 76 US 41 9 Wall 4, 19 L. Ed 593]
“The law requires proof of jurisdiction to appear on the record of the administrative agency and all administrative proceedings” [Hagans v. Lavine, 415 US 533]
Subtitle A - Income Tax - the Foreign Tax
Remember that the third paragraph of Treasury Decision 2313 essentially says that (withholding) "agents", or "representatives", are going to withhold tax (from nonresident aliens). But, what is the legal definition of a "Withholding Agent", who appears to be the legal entity responsible for the withholding and payment of income taxes ? Again, from 26 U.S.C. 7701(a):
...
(16). Withholding Agent. - The term "Withholding Agent" means any person required to deduct and withhold any tax under the provisions of sections 1441, 1442, 1443,, or 1461.” ...
So, it appears as though a withholding agent can definitely withhold tax, can’t he ? Well, let us look at what is truly authorized by these Code Sections referenced here in the definition. The first thing to point out is that all of the code sections that start with ‘14’ are in Chapter 3 of Title 26. Chapter 3 is titled:
“WITHHOLDING OF TAX ON NONRESIDENT ALIENS
AND FOREIGN CORPORATIONS”.
These sections, 1441, 1442, 1443, and 1461, cited in the definition of a Withholding Agent, state:
§ 1441. Withholding of Tax on Nonresident Aliens.
(a) General rule. Except as otherwise provided in subsection (c) all persons, in whatever capacity acting having the control, receipt, custody, disposal or payment of any of the items of income specified in subsection (b) (to the extent that any of such items constitutes gross income from sources within the United States), of any nonresident alien individual, or of any foreign partnership hall deduct and withhold from such items a tax equal to 30 percent thereof, except that in the case of any items of income specified in the second sentence of subsection (b), the tax shall be equal to 14 percent of such item. (emphasis added)
(b) Income items. ...
Section 1441 only authorizes withholding from nonresident aliens.
§ 1442 . Withholding of tax on foreign corporations.
(a) General rule. In the case of foreign corporations subject to taxation under this subtitle, there shall be deducted and withheld at the source in the same manner and on the same items of income as is provided in Section 1441 a tax equal to 30% thereof. ...
(b) Exemption. Subject to such terms and conditions as may be provided by regulations prescribed by the Secretary, subsection (a) shall not apply in the case of a foreign corporations engaged in trade of business in the United States if the Secretary determines that the requirements of subsection (a) impose an undue administrative burden and that the collection of the tax imposed by section 881 on such corporation will not be jeopardized by the exemption.
(c) Exception for certain possessions corporations. For purposes of this section, the term "foreign corporation" does not include a corporation created or organized in Guam, American Samoa, the Northern Marianna Islands, or the Virgin Islands or under the law of any such possession if the requirements of subparagraphs (A), (B), and (C) of section 881(b)(1) are met with respect to such corporation.
Section 1442 only authorizes the withholding from foreign corporation.
§ 1443 Foreign Tax Exempt Organizations
(a) Income subject to section 511.
...
(b) Income subject to section 4948.
....
Section 1443 only authorizes the withholding from foreign tax exempt organizations.
The last section referenced in the definition of a Withholding Agent, 1461, states:
§ 1461 Liability for withheld tax.
Every person required to deduct and withhold any tax under this chapter is hereby made liable for such tax and is hereby indemnified against the claims and demands of any person for the amount of any payments made in accordance with the provisions of this chapter. (emphasis added)
Section 1461 says withholding agents are made liable for the payment of taxes they withhold from individuals (foreigners). Well, what do you know ? Here is a code section where someone is made liable for such tax. And who is made liable ? The withholding agents are made liable for the tax, and that triggers the filing requirements of § 6011. Remember § 6011 ? We were looking for someone who was made liable for payment of the tax, and here it is. Section 6011 is the filing requirement for withholding agents, not Citizens, or even individuals. Withholding agents are made liable in § 1461 for the payment of taxes withheld, and that liability triggers the filing requirements associated with and under § 6011. And who are Withholding agents authorized to withhold income taxes from ? Foreigners, and foreigners only. And what else does § 1461 also say, that they are : "... indemnified against the claims and demands of any person for the amount of any payment made in accordance with the provisions of this chapter".
And what Chapter is this from ? Chapter 3 - Withholding from Foreigners. And that means that if they wrongfully withhold from someone other than a foreigner, like a Citizen, they’re not indemnified from claims against them for wrongful withholding. So, U.S. Citizens who have income tax wrongfully withheld from them, can sue the withholding agent to have those moneys returned.
Who are the Withholding Agents ? Well, your bank is a Withholding Agent, your stock broker is a Withholding Agent, your employer is NOT a Withholding Agent. Your employer is your employer and employers are defined for purposes of implementing the employment taxes imposed in Subtitle C (see 26 USC 3401(d)), and they don’t have anything to do with income taxes under Subtitle A, other than the fact that they are apparently authorized to withhold income taxes at the source by a W-4, which we are going to look at in a minute. It is clear that by statutory definition Withholding Agents can only withhold from foreigners, and that they are only indemnified for withholding under Chapter 3, which, as we have seen, is only from foreigners.
We have just examined the complete legal authority of a "Withholding Agent" to withhold taxes and, as you can see for yourself, there is no legal authority anywhere in the law for a Withholding Agent to withhold subtitle A income tax from a U.S. Citizen. WHY ? Because the tax is not imposed on the domestic income of Citizens earned by Right, and therefore would never need to be withheld from them ?
Remember the mysterious paragraph C, that nonresident aliens cannot claim, referenced in the third paragraph of Treasury Decision 2313. Here is Section 6654 - Failure by individual to pay estimated income tax. Take careful note of paragraph (e)(2)(C).
§ 6654. Failure by individual to pay estimated income tax.
(a) Addition to the tax. In the case of any underpayment of estimated tax by an individual, except as provided in subsection (d), there shall be added to the tax under chapter 1 and the tax under chapter 2 for the taxable year an amount determined at an annual rate established under section 6621 upon the amount of the underpayment (determined under subsection(b)) for the period of the underpayment (determined under subsection (c)).
.....
(e) Exceptions.
(1) Where tax is small amount ......
(2) Where no tax liability for preceding taxable year.
No addition to tax shall be imposed under subsection (a) for any taxable year if -
A) the preceding taxable year was a taxable year of 12 months,
B) the individual did not have any liability for tax the preceding
taxable year, and
C) the individual was a Citizen or resident of the United States
throughout the preceding taxable year.
(3) Waiver in certain cases ... (emphasis added)
When you file a Form 1040, what you are actually doing is paying estimated income tax. And this Section, 6654, addresses the failure by an individual to pay estimated income tax. Subsection (e) addresses the exceptions for that failure. Within subsection (e), Subsection (2) provides that where there is "no tax liability for preceding taxable year" then "No addition to tax shall be imposed under subsection (a) for any taxable year if" the conditions in subparagraph (A), (B) and (C) are met.
Remember that Citizens do not have any liability for tax on domestic income, according to the Paperwork Reduction Act tables in the Code of Federal Regulations relating to the tax imposed, and the liability established, under Chapter 1 Section 1 - Tax Imposed. It is the nonresident aliens who are liable for this tax (and their withholding agents), according to Treasury Decisions 2313.
Now let’s look at conditions (A) and (B) as well. (A) says, “the preceding taxable year was a taxable year of 12 months”. Well, just about everyone satisfies that condition, and (B) says: “the individual did not have any liability for tax for the preceding taxable year”. We've seen that all Citizens who do not have foreign earned income or foreign principals satisfy this condition, and then we have, again, (C) “the individual was a Citizen or resident...” . Citizens and residents aliens are excepted from the failure to pay. Here is the mysterious paragraph C referenced in Treasury Decision 2313, excepting Citizens from the failure to file and pay estimated income tax.
If you still are skeptical and don’t believe me, here's Section 1.1441-5 from The Code of Federal Regulations.
26 C.F.R. 1.1441-5 Claiming to be a person not subject to withholding.
(a) Individuals. For purposes of chapter 3 of the code an individual's written statement that he or she is a Citizen of the United States may be relied upon by the payer of the income as proof that such individual is a Citizen or resident of the United States. This statement shall be furnished to the withholding agent in duplicate. An alien may claim residence in the United States by filing form 1078 with the withholding agent in duplicate in lieu of the above statement.
(b) Partnerships and Corporations. .....
This corresponds to Section 1441 of the United States Code which we reviewed earlier. It clearly states:
"For purposes of chapter 3 of the Code an individual’s written statement that he or she is a Citizen or resident of the United States may be relied upon by the payer of the income as proof that such individual is a Citizen or resident of the United States.”
and therefore, is not subject to the withholding of income taxes. This is confirmed in Publication 515, the instruction booklet from the IRS, to the employer, on how to implement the subtitle A withholding regulations. In this booklet it states
WITHHOLDING EXEMPTIONS AND REDUCTIONS
You should withhold any required tax if facts indicate that the individual, or the fiduciary, to whom you are to pay the income is a nonresident alien. However, the alien may be allowed an exemption from withholding or a reduced rate of withholding as explained here.
Evidence of Residence. If an individual gives you a written statement stating that he or she is a Citizen or resident of the United States, and you do not know otherwise, you do not have to withhold tax. An alien may claim U.S. residence by filing with you, Form 1078, Certificate of Alien Claiming Residence in the United States... (emphasis added)
Why ? Because as we have seen, under the law, the tax is not imposed on the domestic income of Citizens earned by right, or resident aliens as it turns out, and therefore there is never any need to withhold this tax from those Citizens, as the instructions accurately point out. That is the extent of the Subtitle A income tax as it is actually imposed under the law. So what have you been paying ?
Subtitle C - Employment Tax - the Social Security tax
Now we are going to look at the laws implementing the Subtitle C, Employment tax, for Social Security purposes, which program, tax and subtitle first appeared in the law in the 1930s, some 23 years AFTER the income tax was supposedly created by the 16th Amendment (false belief as previously shown - the tax actually started in 1861).
That brings us to Title 26 , subtitle C, Chapter 24, Section 3402 - Income Tax Collected at Source. This is where most employers believe they are authorized to withhold income tax from Citizens. Please note carefully the language of subsections (n) and (p). For some reason, however, the tax industry in America doesn’t seem to be able to read more than subsection (a) of this code. But it is a canon of law that “THE LAW MUST BE CONSTRUED FROM ITS FOUR CORNERS, SO AS TO GIVE MEANING TO ALL OF ITS PARTS”.
§ 3402. Income tax collected at source
(a) Requirement of withholding. (1) In general. Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary....
...
(n) Employees incurring no income tax liability Not withstanding any other provisions of this section an employer shall not be required to deduct and withhold any tax under this chapter upon a payment of wages to an employee if there is in effect with respect to such payment a withholding exemption certificate furnished to the employer by the employee certifying that the employee -
(1) incurred no liability for income tax imposed under subtitle A for
his preceding taxable year, and
(2)anticipates that he will incur no liability for income tax imposed
under subtitle A for his current taxable year.....
....
(p) Voluntary withholding agreements The Secretary is authorized by regulations to provide for withholding -
(1) from remuneration for services performed by an employee for his
employer which does not constitute wages, and
(2) from any other type of payment with respect to which the Secretary
finds that withholding would be appropriate under the provisions of this chapter,
if the employer and the employee, or in the case of any other type of payment the person making and the person receiving the payment, agree to such withholding. Such agreement shall be made in such form and manner as the Secretary may by regulations provide. For purposes of this chapter (and so much of subtitle F as relates to this chapter) remuneration or other payments with respect to which such agreement is made shall be treated as if they were wages paid by an employer to an employee to the extent such remuneration is paid or other payments are made during the period for which the agreement is in effect ...(emphasis added)
As you can see in Subsection (a) it says: "every employer making payment of wages shall deduct and withhold upon such wages a tax...” . If one does not read this whole section (and all the subsections) carefully, it appears that employers are authorized to withhold income taxes from your wages. But after reading subsections (n) and (p) carefully it is clear that if you tell your employer that you have no liability under subtitle A, and give him a Statement of Citizenship as referenced in 26 CFR 1.1441-5, and that you will not volunteer to agree to such withholding (for Social Security), because you do not voluntarily participate in Social Security for reasons of religious objection, then the employer is not required to withhold tax, and in fact has no legal authority left in the law, under which withholding could be legally authorized or effected.
And then there is this next section from the same chapter.
§ 3404 Return and Payment by Governmental Employer.
If the employer is the United States, or a State, or political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing, the return of the amount deducted and withheld upon any wages may be made by any officer or employee of the United States, or of such State, or political subdivision, or of the District of Columbia, or of such agency or instrumentality, as the case may be, having control of the payment of such wages, or appropriately designated for that purpose.
Notice carefully HOW THE WORD “RETURN” IS USED HERE. This is the "return of income" to the Federal government required from Federal employees under the Federal Employment "kickback" agreement, often referred to as INCOME TAX. The "return" referenced here is clearly NOT A FORM to be filed, but a "kickback" (an actual returning of funds) to the Treasury by the "employer" - The United States GOVERNMENT. NOBODY ELSE IS REQUIRED TO KICKBACK ANYTHING to the U.S. Treasury..
Now, who are the employers and the employees actually defined in the law, and addressed by these sections, and precisely what are wages. This next section is also from Title 26, Subtitle C, Chapter 24, where we also find Section 3401, which says:
....
(c) Employee. For purposes of this chapter, the term "employee" includes an officer, employee or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term "employee" also includes an officer of a corporation.
(d) Employer. For purposes of this chapter, the term "employer" means the person for whom an individual performs or performed any service, of whatever nature, as the employee of such person, ...
Only FEDERAL workers and Officers (of Federal corporations) ARE STATUTORILY DEFINED AS EMPLOYEES "for purposes of this chapter". Are you a Federal employee ? AND OF COURSE if ONLY Federal workers are employees, WHO IS THE ONLY POSSIBLE EMPLOYER in this chapter ? THE FEDERAL GOVERNMENT. Are you an officer of a Federal corporation or a Federal employee ? (If you are an officer of a private corporation, this statute does not affect you, but even if it did, it could only effect you in regards to the corporate tax affairs, NOT personal matters.) BY DEFINITION (of “employee”), THIS WHOLE CHAPTER HAS NOTHING TO DO WITH INDIVIDUALS IN THE PRIVATE SECTOR EXCEPT WHEN THEY VOLUNTEER (for Social Security), It ONLY addresses Federal "employees" working for the Federal "employer". Why ? Because Congress cannot control any employment agreement except its own (the government’s).
WWWe further see the limited federal jurisdiction, reflected by the statutorily defined areas of coverage for these subtitle C taxes, which do NOT include the 50 states, in Chapter 21 for the FICA (Federal Insurance Contributions Act) tax. Section § 3121 states:
...
(e) State, United States, and Citizen. For purposes of this chapter
(1) State. The term ''State'' includes the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(2) United States. The term ''United States'' when used in a geographical sense includes the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa. An individual who is a Citizen of the Commonwealth of Puerto Rico (but not otherwise a Citizen of the United States) shall be considered, for purposes of this section, as a Citizen of the United States.
And again, in Chapter 23, Federal Unemployment Tax Act (FUTA), contains Section 3306, which states:
...
(j) State, United States, and American employer. For purposes of this chapter -
(1) State. The term ''State'' includes the District of Columbia, the Commonwealth of Puerto Rico, and the Virgin Islands.
(2) United States. The term ''United States'' when used in a geographical sense includes the States, the District of Columbia, the Commonwealth of Puerto Rico, and the Virgin Islands.
(3) American employer. The term ''American employer'' means a person who is -
(A) an individual who is a resident of the United States,
(B) a partnership, if two-thirds or more of the partners are residents of the United
States,
(C) a trust, if all of the trustees are residents of the United States, or
(D) a corporation organized under the laws of the United States or of any State.
An individual who is a Citizen of the Commonwealth of Puerto Rico or the Virgin islands (but not otherwise a Citizen of the United States) shall be considered, for purposes of this section, as a Citizen of the United States...
Clearly there are supposed to be distinct differences in the extent of the taxing Authority established in each of these programs (FICA & FUTA), under each of these Chapters (21 and 23). Please note the difference in these statutes, which do NOT include the 50 states, and 6103(b)(5), WHICH DOES.
However, both sections define the terms “United States” and “State” for use within their respective chapters ONLY. AND SO WE SEE THAT CONGRESS IS CLEARLY CAPABLE of making it explicitly clear where the fifty states are included in the term “STATE” or “UNITED STATES”, AND WHERE THEY ARE NOT. Obviously, where the States are NOT “included”, IT IS DONE INTENTIONALLY, and not by accidental omission. THE INTENT is to document the limitation of power granted. THE IRS IGNORES ALL STATUTORY LIMITATIONS ON THEIR POWER AND ACTS AS THOUGH THEY ARE GOD, and you MUST OBEY THEM OR SUFFER ! BALONEY, not according to the law !
So which of these definitions is applicable and active in Chapter 22 ? NEITHER !! Chapter 22 has no Code section that REDEFINES these terms for use in that Chapter, so its definitions for those terms arise and are controlled under Subtitle F - Procedure & Administration, in Section 7701 (remember), which states:
§ 7701. Definitions.
(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof -
...
(9) United States The term ''United States'' when used in a geographical sense includes only the States and the District of Columbia.
(10) State. The term ''State'' shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
...
So, what’s really happening in the private work place? "Voluntary withholding agreements" under Subsection (p), that’s what’s really happening. When you file a W-4 with your employer, and specify the number of deductions you are claiming on it, you are voluntarily authorizing your employer to withhold income taxes from you. Naturally, he honors your voluntary request. But, if you gave him a statement of citizenship instead of a W-4 (per 26 CFR 1.1441-5), he would not have any legal authorization at all, anywhere in the law, to withhold any taxes from you. This is evidenced from the common knowledge that no tax is normally withheld from contracted consultants, who are not W-4 employees and who have NOT made a request to partcipate in Social Security. If the tax were mandatory, IT WOULD BE WITHHEL:D FROM THOSE CONTRACTED WORKERS AS WELL. And the employer is instructed not to withhold income taxes under such circumstances in Publication 515, as we have seen.
To see that Section 3402 - Income tax collected at source isn't really a legal authority to withhold income tax mandatorily from everybody, but rather, it is an authority to withhold employment tax) on "wages" from those who have requested to participate in Social Security through the execution and provision of a W-4 voluntarily (even Section 61 doesn't include "wages" as “gross income:), one need only look as far as Section 7806.
§ Section 7806 - Construction of Title.
(a) Cross references. The cross references in this title to other provisions of law, where the word "see" is used, are made only for convenience, and shall be given no legal effect.
(b) Arrangement and classification. No inference, implication, or presumption of legislative construction shall be drawn or made by reason of the location or grouping of any particular section or provision or portion of this title, nor shall any table of contents, table of cross references, or similar outline, analysis, or descriptive matter relating to the contents of this title be given any legal effect. The preceding sentence also applies to the side notes and ancillary tables contained in the various prints of this Act, before its enactment into law.
As you can see the descriptive title of Sec. 3402. Income Tax Collected at Source, HAS NO LEGAL EFFECT ! The actual legal authorities established by the law are the limited authorities established by the actual wording and language of ALL of the code section paragraphs in the statute. Section 3402(a) authorizes the collection of employment taxes on WAGES from Federal employees and voluntary participants in Social Security, not the collection of income taxes on the earnings of all persons.
A W-4 is the "voluntary agreement" referenced in subsection (p) of § 3402. Through its execution, you voluntarily create "taxable income" in your name for Social Security purposes, and further request the withholding of income tax from your wages when you specify a number of deductions to be taken.
According to 26 CFR 1.1441-5 a Statement of Citizenship may serve as the "withholding exemption certificate" referenced in subsection (n) of § 3402. And a W-2 may be USED AS A SUBSTITUTE FOR A FORM 1040, as indicated by the Federal Register’s publication (shown below). The most direct proof that the IRS violates the RIGHTS of the Citizens of the United States of America by controlling their labor through an UNLAWFUL DEBT PROCESS (not tax law), based in "voluntarily" executed legal instruments (W-4, 1040, etc.) that establish a DEBT in the name of, and under the guise and pretense, of TAX, is THEIR OWN NOTICE IN THE FEDERAL REGISTER. This notice appeared in the Federal Register dated Sept. 11, 1946 at 117A-39. It reads:
FORM W-2. Withholding statement.
This is a statement of wages paid during the calendar year and the amount of income tax withheld on such wages, if any. The original and duplicate are furnished by the employer to employee at the close of the calendar year or upon termination of his status as an employee. The original is used as an optional Income Tax Return by the employee in lieu of Form 1040.
(emphasis added)
The FACT that the IRS is INSTRUCTED TO ACCEPT THE W-2 FORM AS A SUBSTITUTE FORM 1040 IS PROOF that the IRS' true authority is limited to the collection of a "kickback" on Federal "wages". The term "wages" in the I.R. Code technically means ONLY covered earnings that are paid to Federal government employees for personal services. Covered under the Social Security provisions, and includible in gross income under Subtitle A of the I.R. Code. IF THE IRS had authority to collect on other forms of income, (i.e. interest, dividends, pensions, etc.) THEY WOULD NOT BE INSTRUCTED TO IGNORE THESE OTHER FORMS OF INCOME AND ACCEPT THE W-2 (that the employer, the Federal government, is required to make) IN LIEU OF A FORM 1040, now would they ?.
20 CFR 404.1041 Wages.
(a) the term "wages" means remuneration paid to you as an employee for employment unless specifically excluded....
(b) if you are paid wages it is not important what they are called. Salaries, fees, bonuses and commissions on sales or on insurance premiums are wages if they are paid for employment.....
20 CFR 404.1003 Employment.
Employment means, generally any service covered by social security performed by an employee for his or her employer...
20 CFR 404.1004 What work is covered as employment.
(a) General requirements of employment. Unless otherwise excluded..., the work you perform as an employee for your employer is covered as employment under social security if one of the following situations applies:
(1) You perform the work within the United States...
(2) You perform the work outside the United States and you are a Citizen or resident...
OK. Is that all clear. Maybe this will help:
20 CFR 404.1001 Introduction
(a)(1) In general, your social security benefits are based on your earnings that are on our records... you receive credit only for earnings that are covered for social security purposes. The earnings are covered only if your work is covered. If you are an employee.....Some work is covered by Social Security and some work is not. Also, some earnings are covered by social security and some are not. It is important that you are aware of what kinds of work and earnings are covered so that you will know whether your earnings should be on our records.
(2) If you are an employee, your covered work is called "employment."...
(3) If your work is "employment" your covered earnings are called "wages".
I'm sorry, ISN'T THIS WHERE WE STARTED with WAGES. Don't you just love circular legal definitions that define themselves with references to variations of themselves ? I mean, I hope you don't just think I'm making this up on my own. I couldn't dream this stuff up, ever.
Discussion on Wages
The term "wages" is also defined in Section 3401 in Subtitle C, where it does not relate to anything but Employment taxes, for Social Security purposes, under Chapter 24. WAGES HAVE NOTHING TO DO WITH INCOME TAXES UNDER SUBTITLE A. "Wages" are "covered earnings". Covered earnings are earnings that are taxed, at your request, for the purpose of accumulating "credits" to be used in calculating future Social Security benefit payments to be paid to you upon your filing a claim for benefits after having attained the age (currently 62) that allows you to qualify to make the claim.
Section 3401(a) states:
(a) Wages. For purposes of this chapter, the term "wages" means all remuneration (other than fees paid to a public official) for services performed by an employee for his employer, including the cash value of all remunerations paid in any medium other than cash.
This definition eludes to the existence of an employment agreement between two parties. It states that wages are only what is received for personal services performed by an employee for his employer . Hence, the term "wages" does NOT extend beyond that relationship/agreement. This fact brings out the importance of knowing just WHO is an "employee", and WHO is the "employer" referred to within the Internal Revenue Code (in this chapter) and what exactly constitutes “wages”, because, as we have seen, IN THIS CHAPTER, THAT CAN ONLY BE THE FEDERAL GOVERNMENT according to the definition of "employee".
These definitions have been expanded BY PRESUMPTION and voluntary permissions, NOT law, to include private sector employers participating in the Social Security program as collectors and "payers", by voluntary assumption of that status through application. So, when you have given a Social Security number to your boss on a W-4, he then becomes your "employer", by virtue of your request, and you then have "wages" (covered earnings), and you thus become an "employee", and your work is called "employment", and you become subject to the federal tax code administering the Social Security tax provisions imposed on those who voluntarily assume them under the misguided and mistaken belief that one day (somewhere, far off in the future) they will get a “benefit” from their participation. History says otherwise. Those who fail to learn the lessons of history are doomed to repeat them.
If you do not participate in Social Security or choose to NOT provide your social security number, then you are NOT "legally" an "employee", and you just have earnings, NOT "wages", and you just have a job not "employment", and you have a boss, not an "employer". Especially if you don't work for the Federal government. ALL WITHHOLDING FROM CITIZENS HINGES ON “COVERED” EARNINGS (wages) for the Social Security tax program.
And your boss became an “employer" when he voluntarily applied for an EIN (employment identification number) to participate in the Social Security system as a WITHHOLDER OF EMPLOYMENT TAXES (employer) under subtitle C, NOT subtitle A. Some of these definitions (descriptive paragraphs) are in Title 20 - Education, because just like public schooling, Social Security is VOLUNTARY, not mandatory (one can choose a private school, and one can choose a private retirement program, if he wishes). As a final point it should be noted that 404.1001(a)(5)(b) also states:
"...We generally do not include rules that are seldom used..."
LIKE CITIZENS THAT DON'T PARTICIPATE IN SOCIAL SECURITY !
Now, code section 26 U.S.C. § 3406, which is used to justify or order backup withholding, states:
(a)Requirement to deduct and withhold.
(1) In general. In the case of any reportable payment, if -
(A) the payee fails to furnish his TIN to the payor in the manner required,
(B) the Secretary notifies the payor that the TIN furnished by payee is incorrect,
(C) there has been a notified payee under-reporting described in subsection (c), or
(D) there has been a payee certification failure described in subsection (d), then the payor shall deduct and withhold from such payment a tax equal to 31 percent
of such payment.
(2) Subparagraphs (c) and (d) of paragraph (1) apply only to interest and dividend payments. Subparagraphs (C) and (D) of paragraph (1) shall apply only to reportable interest or dividend payments .....
So if anyone tries to backup withhold from your SALARY OR WAGES, you ask him where that's authorized in the law, because these sections ONLY APPLY TO INTEREST AND DIVIDENDS and patronage dividends. Section 3406 is worth examining a little closer. Paragraphs B and C within it, state that a notice is required from the Secretary; i.e. NO NOTICE = NO legal authority to “Backup Withhold” - the Secretary must make a formal request, or the payor cannot do it. Subsection A specifies a failure of a “manner required” to provide a number. So we will examine the “manner required” for reporting of remuneration to (uncovered) non-employees, which is specified in 26 U.S.C. § 6041 et. seq., dependent upon the source of the payment (bank, broker, corporation, etc.), as we will see.
Also, it is worth noting that 26 U.S.C. Section 3451 states:
§ 3451. Income Tax Collected at Source on Interest, Dividends and Patronage Dividends.
(a) Requirement of withholding. Except as otherwise provided in this subchapter, the payor of any interest, dividend or patronage dividend shall withhold a tax equal to 10 percent of the amount of the payment.
(b) Special Rules.
(1) Time of Withholding. Except as otherwise provided in this subchapter, for the purposes of this subchapter--
(A) any payment of interest, dividend, or patronage dividend shall be treated as made, and
(B) the tax imposed by this section shall be withheld,
at the time of such interest, dividend, or patronage dividend is paid or credited.
So, there is NO authority, anywhere in the law, to backup withhold income tax from the payments or earnings of a United States Citizen who is NOT an employee with covered earnings (wages), only foreigners. If you have given a Statement of Citizenship to your broker (agent), that agent cannot backup withhold from your interest and dividends legally, even if he is ordered to, because the Statement of Citizenship relieves the agent from the duty of (and destroys the legal authority to) withhold(ing) income tax from that individual, as stated in Publication 515.
The following Code Section, 6041, is where the reporting of income to non-employees (contracted persons) on a Form 1099 originates. It states, in pertinent parts:
§ 6041. Information at source.
(a) Payments of $600 or more. All persons engaged in a trade or business and making payment in the course of such trade to another person, of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits and income (other than payments to which section 6042(a)(1), 6044(a)(1), 6047(e), 6049(a), or 6050(N)(a) applies, and other than payments with respect to which a statement is required under the authority of section 6042(a)(2), 6044(a)(2), or 6045), of $600 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations, hereinafter provided for, shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gains, profits and income, and the name and address of the recipient of such payment.
.......
(c) Recipient to furnish name and address. When necessary to make effective the provisions of this section, the name and address of the recipient of income shall be furnished upon demand of the person paying the income. (emphasis added)
and for brokers,
(a) General rule. Every person doing business as a broker shall, when required by the Secretary, make a return, in accordance with such regulations as the Secretary may prescribe, showing the name and address of each customer, with such details regarding gross proceeds and such other information as the Secretary may by forms or regulations require with respect to such business...
and for banks,
6049. Returns regarding payments of interest.
(a) Requirement of reporting . Every person -
(1) who makes payments of interest (as defined in subsection (b)) aggregating $10
or more to any other person during any calendar year, or <BR>
(2) who receives payments of interest (as so defined) as a nominee and who
makes payments aggregating $10 or more during any calendar year to any
other person with respect to the interest so received, shall make a return
according to the forms or regulations prescribed by the Secretary, setting forth
the aggregate amount of such payments and the name and address of the
person to whom paid. ....
and for corporate distributions,
6042. Returns regarding payments of dividends and corporate earnings and profits
(a) Requirement of reporting
(1) In general Every person -
(A) who makes payments of dividends aggregating $10 or more to any
other person during any calendar year, or
(B) who receives payments of dividends as a nominee and who makes
payments aggregating $10 or more during any calendar year to any
other person with respect to the dividends so received, shall make a
return according to the forms or regulations prescribed by the
Secretary, setting forth the aggregate amount of such payments
and the name and address of the person to whom paid...
6044. Returns regarding payments of patronage dividends
(a) Requirement of reporting
(1) In general. Except as otherwise provided in this section, every
cooperative to which part I of subchapter T of chapter 1 applies, which
makes payments of amounts described in subsection (b) aggregating $10
or more to any person during any calendar year, shall make a return
according to the forms of regulations prescribed by the Secretary, setting
forth the aggregate amount of such payments and the name and
address of the person to whom paid...
Now, do you see any requirement anywhere, in any of these code sections, to use a social security number when making reports on these types of earnings ! WHY DO YOU SUPPOSE THEY (banks, brokers, corporations) ALL TRY TO DEMAND A NUMBER FROM YOU ? COULD IT BE THE RESULTING TAX AND DEBT IMPLICATIONS ? CAN THEY LEGALLY REQUIRE YOU TO SUPPLY A NUMBER ? NOT ACCORDING TO THE LAW !
SO, do you see any requirement to provide an SSN, or any other number, to a payor who will be reporting your (ANY) earnings on a Form 1099, INSTEAD of on a Form W-2 ? No, its not there.
As stated, this section (6041) and the others, are the code sections where the use of the Form 1099 originates (reporting payments to individuals NOT "covered" by Social Security). Carefully note that this reporting requirement DOES NOT REQUIRE a Social Security number, a TIN, or any other number from the individual. These sections ONLY require the NAME and ADDRESS of the recipient (and a total amount paid). So give your clients (and/or your employer) your name and address on a Statement of Citizenship ( as specified in C.F.R. 1.1441-5 Claiming to be a Person Not Subject to Withholding), refuse to supply a social security number on a W-4 (because it is voluntary), and tell them to report your earnings on a Form 1099 instead of on a Form W-2 using your name and address as specified in the United States Code. Does that really sound so tough ? Without a SSN on the Form 1099, the IRS computers will not recognize that income as “taxable income”, and consequently, will never try to collect tax on it, income (subtitle A) or employment (subtitle C). In fact there is some question as to whether these reports, without SSNs, ever even get entered into the IRS computer systems because without an SSN, or some other number, the record will never “link” to any “person” or “report” or earnings records, for IRS examination or audit purposes, and therefore is useless information that can never be utilized by the IRS “system”.
Oh, you say, YOU ALREADY GAVE YOUR EMPLOYER A W-4. DID HE TELL YOU IT WAS VOLUNTARY, or claim it was mandatory ? If he did claim it was mandatory, that was fraud. Did he tell you that you can terminate the W-4 with written notice to him indicating such desire on your part ? Probably NOT. So, why not use the law AND TERMINATE YOUR W-4 AGREEMENT tomorrow with this letter.
Date of Letter
Citizen’s Employer
Employer’s Address
City, State Zip
Re: Termination of Current W-4 Agreement.
Dear Sir,
The laws and regulations providing for the withholding of employment taxes are found in Title 26, Subtitle C, Chapters 21 through Chapter 24. The legal provisions for the implementation of the Social Security program and the withholding of tax are contained therein. In the Code of Federal Regulations at Section 31.3402, which corresponds to 26 USC 3402(p), it states in pertinent parts:
31.3402 (p) -1 Voluntary withholding agreements
a) In general. An employee and his employer may enter into an agreement under section 3402 (p) to provide for the withholding of income tax…
b) … an employee who desires to enter into an agreement under section 3402 (p) shall furnish his employer with Form W-4 (withholding exemption certificate) executed in accordance with the provisions of section 3402 (f) and the regulations thereunder. The furnishing of such Form W-4 shall constitute a request for withholding (emphasis added)....
Furthermore, 31.3402 (p) -1(b)(2)states :
"An agreement under Section 3402(p) shall be effective for such period as the employer and the employee mutually agree upon. However, either the employer or the employee may terminate the agreement prior to the end of such period by furnishing a signed written notice to the other." (emphasis added)
Per the instructions provided by these regulations, this is my formal notice to you, my "employer", that based on my sincere religious beliefs regarding the biblical warnings regarding the inventorying of human flesh contained in Revelation, Chapter 13, verses 16 through 17, which read:
16 And he causeth all, both small and great, rich and poor, free and bond, to receive a
mark in their right hand, or in their foreheads;
17 And that no man might buy or sell, save he that had the mark, or the name of the
beast, or the number of his name.,
that I wish to formally terminate between us, any and all W-4 agreements on file with you, as per 26 CFR Sec. 31.3402 (p) -1(b)(2), effectively immediately. Consequently, all use of my social security number in making reports to the IRS must cease immediately, and the company must stop immediately the withholding of all employment taxes imposed under Subtitle C of Title 26, because, since I am no longer a voluntary participant in the Social Security program, I am no longer subject by law or regulation to the withholding or payment of those taxes associated with the administration of that welfare "benefits" program; because the laws and regulations implementing the Social Security program only apply to those individuals who have voluntarily chosen to participate in it.
The voluntary nature of the Social Security program is evidenced by the decision of the United States Supreme Court in the case of Railroad Retirement Board v. Alton Railroad Co, 295 U.S. 330, 55 S. Ct. 758 (1935), wherein the court ruled that Congress did not have authority to create a mandatory benefits program, and cannot compel U.S. Citizens to participate in any benefits program:
"The catalogue of means and actions which might be imposed upon an employer in any business, tending to the satisfaction and comfort of his employees, seems endless. Provision for free medical assistance, nursing, clothing, food, housing, and education of children, and a hundred other matters might with equal propriety be proposed as tending to relieve the employee of mental strain and worry. Can it fairly be said that the power of Congress to regulate interstate commerce extends to the prescription of any or all of these things ? It is not apparent that they are really and essentially related solely to the social welfare of the worker, and therefore remote from any regulation of commerce as such ? We think the answer is plain. These matters obviously lie outside the orbit of congressional power."
I now further call your attention to the following United States Code section:
TITLE 42 - THE PUBLIC HEALTH AND WELFARE
CHAPTER 7 - SOCIAL SECURITY
(a) In general. Whoever -
....
(8) discloses, uses, or compels the disclosure of the social security number of any
person in violation of the laws of the United States; shall be guilty of a felony and
upon conviction thereof shall be fined under Title 18 or imprisoned for not more
than five years, or both. (emphasis added)
The fine provided for by Title 18 is $10,000.
This letter terminates your authority to withhold from my paychecks the employment taxes imposed under Subtitle C, and to use my social security number in making reports to the IRS. If you believe that there is a statutory authority that exists for you to continue to withhold tax from my pay under Subtitle A - income taxes, and continue to use my social security number for reporting to the IRS for such Subtitle A purposes, please cite the Code section within Subtitle A (Chapters 1 through 6 of Title 26) that you believe grants you the authority to withhold income tax from a United States Citizen, and to use my social security number for such Subtitle A reporting, in your response to this letter.
If you cannot cite a statutory authority under Subtitle A to withhold tax from a United States Citizen and use my social security number in conjunction with Subtitle A tax reporting, I will presume that you understand that you no longer have any legal authority under which you may operate to withhold taxes from my paychecks or use my social security number, and consequently, you will cease immediately all such withholding from my pay and use of my social security number for reporting purposes. Thank you for your prompt attention to this matter.
Thank you for your prompt attention to this matter.
Sincerely,
Sovereign Citizen's Signature
========================================================
NOW COULD THAT BE ANY EASIER TO DO !
If your employer (or his lawyer) is worried about IRS penalties, show them:
§ Sec. 6724. Waiver; definitions and special rules.
(a) Reasonable cause waiver . No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.
This shows that your employer and clients cannot be penalized by the IRS if you have provided the correct documentation when making your requests (see C.F.R. 1.1441-5 Claiming to be a Person Not Subject to Withholding). Certainly, being relieved of the duty of withholding tax (Publication 515) under the presentation of Statement of Citizenship is “reasonable cause” and not “willful neglect”.
It is interesting to note that section 3403 - Liability for Tax, states:
The employer shall be liable for the payment of the tax required to be deducted and withheld under this chapter, and shall not be liable to any person for the amount of any such payment. (emphasis added)
There you go, the employer is liable! The employers are liable, and that triggers the filing requirements of Section 6001 , remember, where "Every person liable...". It’s the employers who are liable, and the withholding agents who are made liable, and both of those sections, 6001 and 6011, establishing the associated filing requirements, are there so that the government can prosecute anyone who withholds income taxes and doesn’t pay them over to the Federal Treasury. Remember that Section 6001 referenced "employers" in its third sentence ? This is why, according to Section 3403 "THE EMPLOYER SHALL BE LIABLE", not the individuals. By its own specific language Section 6001 only relates to those "persons" who are liable - the employers.
These are the ONLY code sections in existence that establish liability for the payment of income tax, other than the limited liability for foreign earned income imposed and established by Chapter 1, Section 1 - Tax imposed (the income tax), which we have already examined. There are no other Code Sections anywhere in the United States Code that establish liability for payment of the income tax by individuals. And as you have seen, what the U.S. Citizens are actually liable for under the law is the payment of income tax on privileged (foreign or federal) sources, not domestic income earned by Right.
And from the Supreme Court on this subject:
“The reasonable construction of the taxing statutes does not include vesting any tax official with absolute power of assessment against individuals not specified in the statutes as persons liable for the tax without an opportunity for judicial review of this status before the appellation of “taxpayer” is bestowed upon them and their property seized.” [Botta v. Scanlon, 228 F. 2nd 304 (1961)] .
“Let me point this out now. Your [subtitle C “employment”] income tax is 100 percent voluntary and your [subtitle E] liquor tax is 100 percent enforced tax. Now the situation is as different as day and night. Consequently, your same rules just will not apply” Dwight E. Avis, Head of ATF, IRS - House Ways and Means Subcommittee Hearings - 1953 ...”(BUT SOMEHOW, TODAY, THE IRS CLAIMS THEY DO !)
"You are among the millions of Americans who comply with the tax law voluntarily."
(1992 Form 1040 Tax Instruction Booklet)
"Two aspects of the Federal Income Tax system - voluntary compliance with the law and self-assessment of tax - make it important for you to understand your rights and responsibilities as a taxpayer. 'Voluntary compliance' places on the taxpayer the responsibility for filing an income tax return. You must decide whether the law requires you to file a return. If it does, you must file your return by the date it is due." (IRS Publication 21)
"The IRS's goal is to increase the rate at which taxpayers voluntarily pay their taxes from the current 82.3% to 90% by 2001." (The Washington Post front page Dec. 2, 1993 - "IRS Hopes Change")
"Each year American taxpayers voluntarily file their tax returns and make a special effort to pay the taxes they owe." (Johnie M. Walters IRS Commissioner, 1971 Form 1040 Booklet)
"Our tax system is based on individual self-assessment and voluntary compliance." (Mortimer Caplin, IRS Commissioner, 1975 IRS IR Audit Manual)
"The mission of the service is to encourage and achieve the highest possible degree of voluntary compliance." (Donald C. Alexander, IRS Commissioner, Federal Register, March 1974)
"The IRS's primary task is to collect taxes under a voluntary compliance system. (Jerome Kurtz IRS Commissioner, 1980 IR Annual Report)
"We have a voluntary compliance system." (Fred Goldberg, IRS Commissioner, Nightline with Ted Koppel, Apr.13, 1990)
and finally, from the Supreme Court of the United States of America, the highest authority in the land:
"Our system of taxation is based on voluntary assessment and payment, not upon distraint (force)." (United States v. Flora, 362 US 145 (1958))
This is a whole page full of statements that the IRS has made, in public, to the media and the People, regarding the "true nature of our tax situation". The sources are quoted. In these, the IRS repeatedly states over and over again that Citizens comply with the tax laws voluntarily, and that our tax system is based on voluntary compliance and self assessment, and now you know why. Because if the Citizen does not voluntarily comply, and through his own ignorance of the law, misapply the code and use the wrong form, the whole system fails. And that’s why they say it’s voluntary, because under the law, it is. And, if you do comply voluntarily, then they can use against you the information that you provided on the Form, because the courts have ruled that when you perform a voluntary self assessment (file a Form 1040), you establish the liability for payment of the tax necessary for the IRS to collect and enforce the amount assessed.
But there is no statutory liability imposed on Citizens for the payment of income tax on domestic income, only foreign income under tax treaties and on income from federal sources. You, the Citizen, create your own liability for the income tax that grants the IRS the jurisdictional authority to enforce and collect the numbers you show on your return when you voluntarily perform that self assessment using the wrong form. And, it doesn’t matter that you misapplied the law or used the wrong form; you establish the liability voluntarily with the assessment, and it is then legal, and you owe it. You have to pay it, and they can enforce it if you don't. And if they find anything incorrect or fraudulent on the return, they can assess penalties and interest because the assessment was incorrect or not done properly.
I don’t know if anybody noticed, but if you look back to the table in 26 CFR 602.101, where we saw the OMB Document Control Numbers required by Section 1.1-1, on the next line 1.23-5 appears, which does require the form numbered 1545-0074, Form 1040. Some of you may have noticed this and thought I was trying to slip one by you. So, here’s 1.23-5
26 CFR 1.23-5 Certification Procedures.
(a) Certification that an item meets the definition of an energy-conserving component or renewable energy source property. Upon request of a manufacturer of an item....the Assistant Commissioner shall certify ... that :
(1) the item meets the definition of insulation (see ........
This is from the Code of Federal Regulations, and it starts:
"Certification procedures. (a) Certification that an item meets the definition of an energy-conserving component or renewable energy source property..."
Section 1.23-5 is the renewable energy resource credit. If you want to claim this deduction, or that credit, you have to file Form 1040, because it’s the proper legal vehicle or mechanism through which that deduction is claimed. And there are a lot of other deductions and credits and legal reasons why Form 1040 would be required. If you want to claim a refund, you have to file Form 1040, because that’s the established legal mechanism through which a Citizen claims a refund. If you want to claim certain credits, or take certain deductions, you have to file Form 1040 because that is the legal mechanism through which those credits and deductions are claimed. But, if all you want to do is satisfy the liability for tax on taxable income that you as a Citizen have, without claiming any deductions, or taking any credits, then the only form that you are required to file is Form 2555, not Form 1040. Because Form 2555 is the only form required by law, the proper vehicle for you to use to satisfy the liability you have for income tax as an individual Citizen, according to the law. So, how does the IRS get away with doing what they have been doing for so long?
Remember that if you want to claim a refund, you MUST file a Form 1040 because it is the legal mechanism through which a refund is claimed !! This is why they deceptively withhold from you when you are young and start working at your first job. You are young and naive, and know nothing about the tax law and they take advantage of your ignorance and withhold more than is necessary. You are gradually conditioned, or programmed, to file a return TO GET A REFUND, NOT to pay the tax. Then when you get older, you've been filing the Form 1040 all your life, so you continue doing what you did all along, ignorantly; because you are no longer filing to get a refund, NOW YOU'RE FILING TO PAY A TAX THAT YOU ARE NOT LIABLE BY LAW TO PAY !
IF ALL YOU WANT TO DO IS SATISFY YOUR LIABILITY, YOU DO NOT USE FORM 1040.
CITIZENS USE FORM 2555 to satisfy liability ! At least that's what the law says !
That's because, as far as individuals are concerned,
THE INCOME TAX IS STILL JUST A FOREIGN TAX !
I know old habits are hard to break, and that all of this information doesn't agree with what you have been told to believe all of your life, and in fact, doesn't seem possible, but keep reading because the truth is far stranger than fiction and the law records the truth. And, as you will see, IGNORANCE CAN BE ELIMINATED WITH KNOWLEDGE, ITS STUPIDITY THAT REMAINS FOREVER, and
THE TRUTH WILL SET YOU FREE !
CHAPTER 3
ENFORCEMENT
Remember earlier, the question was raised: "What is taxable income ?" Section 63 is the code section that the IRS claims establishes what "taxable income" is. It states:
(a) In general. Except as otherwise provided in subsection (b), for purposes of this subtitle, the term "taxable income" means gross income minus the deductions allowed by this chapter (other than the standard deduction).
(b) Individuals who do not itemize their deductions ..........
The IRS claims that since the definition of "taxable income" references "gross income" (defined in Section 61), then everything that anybody makes that is listed in Section 61 is taxable income and must be reported. That is the complete and total argument that the IRS makes in its demand for income taxes. Section 61 states:
(a) General definition. Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent; and
(15) Income from an interest in an estate or trust.
(b) Cross references.
For items specifically included in gross income, see part II
(Sec. 71 and following). For items specifically excluded
from gross income, see part III (Sec. 101 and following).
Do you see where subsection (a) lists possible sources and where subsection (b) says where to find the items specifically included in gross income. Do you understand the difference between a possible source and an included item. What exactly are those “items specifically included” ?
Part II. Items specifically included in gross income.
§ 71. Alimony and separate maintenance payments.
§ 72. Annuities; certain proceeds of endowment and life insurance contracts.
§ 73. Services of child.
§ 74. Prizes and awards.
§ 75. Dealers in tax-exempt securities.
(76. Repealed.)
§ 77. Commodity credit loans.
§ 78. Dividends received from certain foreign corporations by domestic
corporations choosing foreign tax credit.
§ 79. Group-term life insurance purchased for employees.
§ 80. Restoration of value of certain securities.
(81. Repealed.)
§ 82. Reimbursement of moving expenses.
§ 83. Property transferred in connection with performance of services.
§ 84. Transfer of appreciated property to political organizations.
§ 85. Unemployment compensation.
§ 86. Social security and tier 1 railroad retirement benefits.
§ 87. Alcohol fuel credit.
§ 88. Certain amounts with respect to nuclear decommissioning costs.
(89. Repealed.)
§ 90. Illegal Federal irrigation subsidies.
I have not received any income from any of these items specifically included, have you ?
The IRS, of course, claims that the sources are the actual included items, ignoring entirely the precise language (and obvious repercussions) of subsection (b). The possible sources from which income may be derived include:
“compensation for services, gross income derived from business, gains derived from dealings in property, interest, rents, royalties, dividends, alimony, annuities, income from life insurance, pensions, income from discharge of indebtedness, distributive share of partnership...” etc.
BUT THEY (the sources) ARE NOT THE ACTUAL ITEMS INCLUDED. You can see that the definition of gross income has been written to deceptively appear to include all of these, but, I would like you to remember that in 1895 the Supreme Court ruled in Pollock v Farmers Loan & Trust Co. that it is unconstitutional to impose an income tax on the interest and dividends of U.S. Citizens on deposit in U.S. banks. Both of those items are listed here in section 61. Interest is number (4) and Dividends is number (7). And the Supreme Court further ruled in Stanton v Baltic Mining Co. in 1916, that no new power of taxation was conferred by the 16th Amendment.
So, if it was unconstitutional before the 16th Amendment, and no new power was conferred by it; How can Section 61 be constitutional when it states that interest and dividends are part of gross income and will be taxed ? Well, we have to look at what the law shows for how Section 61 is supposed to be implemented and applied.
This version of Section 61 that is shown above is from the current 1986 version of the Code. The previous version of the Code is from 1954. This Section, 61, is nearly identical in both versions, except for the following footnote shown in the 1954 version:
"Source: Sec. 22(a), 1939 Code, substantially unchanged"
For some reason the footnote was dropped when the law was recodified in 1986. It is not known why the footnote was dropped in 1986, but it is very important because, as you can see, the footnote identifies the source of Section 61 as being Section 22(a) in the 1939 code, the last codified version previous to the 1954 version. Being able to research the source of a law is very important to determining how that law is supposed to be properly applied under the law. Without a review of the source materials it is very difficult to accurately determine how a law was originally intended to be applied, and the courts, of course, only have authority over the law, under, and to the extent of, its original intent. So we go to Section 22(a) in the 1939 code, and we see that the format has changed, but indeed, the substance is pretty much the same as in 1986.
(a) General Definition.-"Gross Income" includes gains, profits, and income derived from salaries, wages, or compensation for personal service ... of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses commerce or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever....
But in order to understand how Section 61 is supposed to be applied today, it is very important to know and understand how Section 22 was implemented and applied in 1939,. The two sections are inextricably linked in such relevant fashion, and the answer to our question of how Section 61 can be Constitutional, given the Pollock decision, can only be found by a thorough examination of this relationship.
If we go back to the 1918 statutes we can examine the origins of Section 22, which are found in Section 213, which states:
Sec. 213. That for purposes of this title....the term “gross income” -
(a) includes gains, profits, and income derived from salaries, wages or compensation for personal service (including in the case of the President of the United States, the judges of the Supreme and inferior courts of the United States, and all other officers and employees, whether elected or appointed, of the United States, Alaska, Hawaii, or any political subdivision thereof, or the District of Columbia , the compensation received as such), of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. ...
(emphasis added)
And further insight can be gained from a review of Section 931 from the 1954 Code. It states:
Sec 931. Income from sources within possessions of the United States.
(a) General rule. In the case of individual Citizens of the United States, gross income means only gross income from sources within the United States if the conditions of both paragraph (1) and paragraph (2) are satisfied:
(1) 3-year period. If 80 percent or more of the gross income of such Citizen... was derived from sources within a possession of the United States; and
(2) Trade or business. If 50 percent or more of his gross income ... was derived from the active conduct of a trade or business within a possession of the United States either on his own account or as an employee or agent of another.
...
(h) Employees of the United States. For purposes of this section amount paid for services performed by a Citizen of the United States as an employee of the United States or any agency thereof shall be deemed to be derived from sources within the United States. (emphasis added)
You will notice that Congress is making reference to the gross income WHERE THE U.S. GOVERNMENT (UNITED STATES) IS THE SOURCE of that income, or where it is the “sovereign” authority (possessions). ALSO CAREFULLY NOTE THAT THIS SECTION REVEALS THAT THE TERM “UNITED STATES”, in the I.R. Code, MEANS THE “U.S. GOVERNMENT”, NOT THE NATION OR THE WHOLE COUNTRY. THIS IS VERY IMPORTANT. It indicates that where the phrase “within the United States” or “without the United States” is used, it is NOT being used in the geographical sense (deceptively), BUT IS BEING USED TO INDICATE THE FEDERAL GOVERNMENT as the (ONLY) lawfully affected “source” of the income ! Now go back and reread again everything to this point with that understanding and see if this doesn’t all begin to make REAL sense, as never before !
BECAUSE they (the U.S. government) ONLY have AUTHORITY over their OWN AFFAIRS (their employment contracts). They DO NOT HAVE AUTHORITY over PRIVATE contracts in sovereign . So lets investigate that.
Notice how the definition of “gross income” has been vaguely re-written with each new “codification” of the law, so that without researching its history, it is virtually impossible to determine from today’s statute (61) that there is a limitation to FEDERAL SOURCES inherent in the definition of “gross income”
Now the word “income” is not defined by itself anywhere in the Internal Revenue Code, so what has the Supreme Court said about the definition of the word/term “income” alone ?
“The word (income) must be given the same meaning in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act (of 1909)” [Merchant’s Loan and Trust Co. v. Smietanka, 255 US 509 (at pp. 518 & 519)]
“Whatever difficulty there may be about a precise and scientific definition of ‘income’ it imports, as used here...the idea of gain or increase arising from corporate activities...[Doyle v. Mitchell, 247 US 179]
“Certainly the term ‘income’ has no broader meaning in the 1913 Act than in that of 1909” [Straton’s Independence v. Howbert, 231 US 399, 416, 417]
“...we assume that there is no difference in its meaning as used in the two Acts.” [Southern Pacific Co. v. John Z. Lowe, Jr., 247 US 330, 335]
Furthermore, as you can see in the following table, shown here from the Code of Federal Regulations, Index of Parallel Tables - 1991 enabling regulations for the 1939 code sections, it clearly shows that Section 22, under the 1939 code, was implemented under Title 26, Part 519.
1991 Enabling sections
_____________________________________
26 U.S.C. (1939 I.R.C.)
22 ........................................... 26 Part 519
40 ........................................... 26 Part 1
62 ............................................26 Parts 509,513,514,520,521
143-144 .................................. 26 Part 521
....
The next table reveals what Part 519 is:
CHAPTER 1 - INTERNAL REVENUE SERVICE
DEPARTMENT OF THE TREASURY
(Parts 500 to 529)
____________________________________________
SUBCHAPTER G - Regulations Under Tax Conventions
Part
500 [Reserved]
501 Australia ..........................
502 Greece ............................(x)
503 Germany .........................(x)
504 Belgium ...........................
505 Netherlands ....................
506 Japan ...............................
507 United Kingdom .............
509 Switzerland .....................(x)
510 Norway ............................
511 Finland ...........................
512 Italy .................................
513 Ireland.............................(x)
514 France ............................(x)
515 Honduras .....................
516 Austria ............................(x)
517 Pakistan ..........................(x)
518 New Zealand ..................
519 Canada ........................
520 Sweden ...........................(x)
521 Denmark..........................(x)
Part 519 is the Canadian Tax Treaty. What Section 61 actually defines (through the inherited limitation of Section 22), under the letter of the law; are the sources of taxable income under the foreign tax treaty with Canada. It does not define the domestic sources of taxable income. It defines the Canadian sources, under the Canadian Tax Treaty. Which agrees with everything else in the law that we have seen regarding subtitle A income tax, right ?
The countries shown in the table with an '...(x)' (ed.'s addition) are the countries with whom America has current tax treaties, in effect today (1996). However, since the Canadian Tax Treaty expired in 1993, Part 519 is now shown as reserved for future use in this Table, and Section 61 no longer has any legitimate application within Title 26 (IR Code) for the purpose of defining what gross income is (except, perhaps, under other tax treaties and for Federal employees subject to the “kickback” on Federal “wages” under Chapter 24).
But, most Citizens are ignorant of the law, they’re ignorant of the application of the law, they’re ignorant of the history of the law and these Court rulings, and the IRS relies on and takes advantage of that ignorance. The IRS relies on your ignorance, and your wrongfully self assessing the tax by using the wrong form. And legitimately, under the law, that’s not the way the law is actually applied, nor was it ever intended to be applied in such fashion.
All of the laws of the United States have been codified into what is called the United States Code (USC). There are 50 Titles within the Code. The Titles that have been passed into what is known as "positive" law, are the Law of the nation, and can be legitimately used as "evidence" of statutory violations that result in formal "charges" against persons in our society. This can be seen to be true if one reviews Title 1 USC Section 204, which states:
§ 204. Codes and supplements as evidence of the laws of United States and District of Columbia; citation of Codes and supplements.
(a) United States Code... Provided, however that whenever titles of such Code shall have been enacted into positive law the text thereof shall be legal evidence of the laws therein contained, in all courts of the United States, the several states, and the territories and insular possessions of the United States. (emphasis added)
Each Title that has been passed into positive law records and indicates such passage within the Title itself. The 50 Titles (Positive Titles with *) and their Subjects are listed on the next page.
* Title 1 General Provisions * Title 28 Judiciary and Judicial Procedure
Title 2 The Congress Title 29 Labor
* Title 3 The President Title 30 Mineral Lands and Mining
* Title 4 Flag and Seal, Seat Of * Title 31 Money and Finance
Government, and the States * Title 32 National Guard
* Title 5 Government Organization and Title 33 Navigation and Navigable
Employees Waters
Title 6 Surety Bonds (repealed-Title 31) Title 34 Navy (repealed-Title 10)
Title 7 Agriculture * Title 35 Patents
Title 8 Aliens and Nationality Title 36 Patriotic Societies and
* Title 9 Arbitration Observances
* Title 10 Armed Forces * Title 37 Pay and Allowances Of the
* Title 11 Bankruptcy Uniformed Services
Title 12 Banks and Banking * Title 38 Veterans' Benefits
* Title 13 Census * Title 39 Postal Service
* Title 14 Coast Guard Title 40 Public Buildings, Property, and
Title 15 Commerce and Trade Works
Title 16 Conservation Title 41 Public Contracts
* Title 17 Copyrights Title 42 The Public Health and Welfare
* Title 18 Crimes and Criminal Procedure Title 43 Public Lands
Title 19 Customs Duties * Title 44 Public Printing and Documents
Title 20 Education Title 45 Railroads
Title 21 Food and Drugs Title 46 Shipping
Title 22 Foreign Relations and Title 47 Telegraphs, Telephones, and
Intercourse Radiotelegraphs
* Title 23 Highways Title 48 Territories and Insular
Title 24 Hospitals and Asylums Possessions
Title 25 Indians * Title 49 Transportation
Title 26 Internal Revenue Code Title 50 War and National Defense
Title 27 Intoxicating Liquors
All persons living under the laws of the United States are bound by the "positive" laws in the Titles of the U.S. Code, whereas those Titles that are not passed into positive law appear to be limited in application to specific classes of persons and places, because the Federal government DOES NOT HAVE TERRITORIAL JURISDICTION OVER ALL PEOPLE (SOVEREIGNS) or places (STATES), for ALL matters. Title 26, the Title containing the I.R. Code, HAS NEVER BEEN PASSED INTO POSITIVE LAW and therefore DOES NOT APPEAR TO APPLY TO ALL PEOPLE BECAUSE ACCORDING TO THIS STATUTE, IT IS NOT LEGAL “EVIDENCE OF THE LAWS....OF THE UNITED STATES” and therefore cannot have general applicability to the public without first being published in the Federal Register (as we will see). Who does this Title apply to, then, if NOT all people?
Title 44, Section 1505 sheds some light on this issue, it states:
§ 1505. Documents to be published in Federal Register
(a) Proclamations and Executive Orders; Documents Having General applicability and Legal Effect; Documents Required To Be Published by Congress.
There shall be published in the Federal Register -
(1) Presidential proclamations and Executive orders, except those not having
general applicability and legal effect, or effective only against Federal
agencies or persons in their capacity as officers, agents, or employees
thereof; .... (emphasis added)
Basically this section provides that before ANY ACT OF GOVERNMENT becomes
binding on ALL PERSONS in the nation, that, if regulations are specified, those regulations must be PUBLISHED in the Federal Register. If this publication is not done and were not required, then we would be governed by unknown secret laws. Title 26 has NEVER been passed into positive law, nor have many of its regulations (specifically deficiency, lien, levy and enforcement regulations) ever been printed in the Federal Register as being invocable or applicable under Title 26. Therefore, those unpublished regulations, from this non-positive title, CANNOT LAWFULLY BE APPLIED TO ANYONE EXCEPT FEDERAL EMPLOYEES, as provided for in 44 USC §1505 and 1 USC § 204. Are you a Federal Employee ? Would you like to see what has been published in the Federal Register regarding Title 26 Section 1 (the subtitle A income tax) ? How's this:
[Federal Register: April 22, 1996 (Volume 61, Number 78)]
[Proposed Rules]
[Page 17614-17667]
From the Federal Register On-line via GPO Access [wais.access.gpo.gov]
========================================================
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, 35a, 301, 502, 503, 509, 513, 514, 516, 517, 520, and 521
[INTL-O62-90; INTL-0032-93; INTL-52-86; INTL-52-94]
RINS 1545-AO27; 1545-AR90; 1545-AL99; 1545-AT00
General Revision of Regulations Relating to Withholding of Tax on
Certain U.S. Source Income Paid to Foreign Persons and Related
Collection, Refunds, and Credits; Revision of Information Reporting and
Backup Withholding Regulations; and Removal of Regulations Under Part
35a and of Certain Regulations Under Income Tax Treaties
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking and withdrawal of notice of
proposed rulemaking.]
NOW ISN'T THAT EXACTLY WHAT I TOLD YOU, and showed you earlier !
Furthermore, the Supreme Court has established that where the enforcement authority of the laws in the Internal Revenue Code (Title 26) is dependent upon the regulations promulgated by the Secretary, they must be published in the Federal Register:
"we think it is important to note that the Act's civil and criminal penalties attach only upon violation of regulations promulgated by the Secretary; if the Secretary were to do nothing, the Act itself would impose no penalties on anyone."
California Bankers Assn. v. Schultz, 416 U.S. 21,26 (1974) (emphasis added)
Without published regulations (where regulations are statutorily required) there is no legitimate legal enforcement authority held by the IRS. Now, the Code of Federal Regulations (CFR), Index and Finding Aids - Parallel Table of Authorities shows the location (statutory association) of the published regulations. All regulations with general applicability to the American public must be published in the Federal Register under their authorizing Title and Part. The statutes applicable to assessment, collection and enforcement laws in Title 26 (I.R. Code), and their STATUTORY APPLICABILITY are shown as follows: in that table:
Section Published Regulation in: Description
====== ===================== ======================
6020 27 CFR Part 53,70 Return Prepared by Sec.
6201 27 CFR Part 70 Assessment Authority
6203 27 CFR Part 70 Method of Assessment
6212 NO REGULATION Notice of Deficiency
6213 NO REGULATION ...Petition To Tax Court
6214 NO REGULATION Determinations By Tax Court
6215 NO REGULATION Assessment ... By Tax Court
6301 27 Part 70,24,25,250,270,275 Collection Authority
6303 27 Part 70 Notice & Demand For Tax
6321 27 Part 70 Liens For Tax 6331-43 27 Part 70 Levy and Distraint 6651 27 Part 70,24,25,194 Failure to File or Pay 6671 27 Part 70 Penalty Assessed 6672 27 Part 70 Failure to Collect and Pay Over
6701 27 Part 70 Penalties For Understatement 7201 NO REGULATION Attempt to Evade or Defeat 7203 NO REGULATION Willful Failure to File... 7207 27 Part 70 Fraudulent Returns 7212 27 Part 170,270,275,285,290,295,296 Interference with I.R. Laws 7401 27 Part 70 Judicial Proceedings Authority 7402 NO REGULATION Court's Jurisdiction to Enforce 7403 27 Part 70 Judicial Action To Enforce Lien
7454 NO REGULATION Burden of Proof ... Transferee Cases
7601 27 Part 70 Canvass of District.... 7602 27 Part 70,170,296 Examination of Books .... 7603 27 Part 70 Service of Summons 7604 27 Part 70 Enforcement of Summons 7605 27 Part 70 Time & Place For Examination 7608 27 Part 70,170,296 Authority of Enforcement Officers
As you can see NONE of the published implementing regulations are associated with Title 26, and THERE ARE NO REGULATIONS AT ALL PUBLISHED FOR 6212 - Deficiencies, 6213, 6214, 6215 - Tax Court, 7201, 7203 - Evasion & Willful failure penalties, 7402 Jurisdiction to enforce. Which of course means that THEY APPEAR TO ONLY APPLY TO FEDERAL EMPLOYEES (TRANSFEREES) who MUST RETURN INCOME TO THE TREASURY AS PART OF THEIR EMPLOYMENT AGREEMENT (under 4 USC 111) and Foreigners in America under government control. ALL OF THE PUBLISHED AUTHORITIES ARE FOR TITLE 27 Alcohol, Tobacco & Firearms. THEY DO NOT AND CANNOT APPLY ANYWHERE ELSE UNTIL PUBLISHED IN THE FEDERAL REGISTER UNDER TITLE 26 as being applicable to all Citizens, under Title 26.
This is confirmed at 26 C.F.R. 601.702., where it addresses and specifies the consequences of a failure to publish in the Federal Register. It states therein:
“(ii) Except to the extent that a person has actual and timely notice of the terms of any matter referred to in subparagraph (1) of this paragraph which is required to be published in the Federal Register, such person is not required in any matter to resort to, or be adversely affected by, such matter if it is not so published or is not incorporated by reference therein pursuant to subdivision (1) of this subparagraph. Thus, for example, any such matter which imposes an obligation and which is not so published or incorporated by reference will not adversely change or affect a person’s rights.”
And finally from the Supreme Court on this issue:
“Failure to adhere to agency regulations may amount to denial of due process: if regulations are required by Constitution or statute.” [Curley v. United States, 791 F. Supp. 52]
“for federal tax purposes, federal regulations govern.”
[Dodd v. United States, 223 F Supp 785, Lyeth v. Hoey, 305 US 186,, 59 S. Ct 155]
“...these regulations called for by the statute itself, have the force of law, and violations thereof incur criminal prosecutions, just as if all the details had been incorporated into the congressional language. The result is that neither the statute nor the regulations are complete without the other, and only together do they have any force. In effect, therefore, the construction of one necessarily involves the construction of the other.” [United States v. Mersky 361 U.S. 438].
Assessment Authority
So, what does the IRS do ? The IRS claims that Section 6201 grants them the authority to assess income taxes directly. It states:
(a) Authority of Secretary. The Secretary is authorized and required to make the inquiries, determinations, and assessments of all taxes imposed by this title, or accruing under any former internal revenue law, which have not been duly paid by stamp at the time and in the manner provided by law. Such authority shall extend to and include the following:
(1) Taxes shown on return. The Secretary shall assess all taxes determined by the
taxpayer or by the secretary as to which returns or lists are made under this title.
(2) Unpaid taxes payable by stamp.
(A) Omitted stamps. ...
(B) Check or Money Order not duly paid. ...
(3) Erroneous income tax prepayment credits. ....
.........
(b) Amount Not To Be Assessed.
(1) Estimated income tax. No unpaid amount of estimated income tax required to be
paid under section 6654 or 6655 shall be assessed.....
Are income taxes “paid by stamp” ? NO ! Now, are you beginning to understand why the IRS wants you to voluntarily file a return ? Because subparagraph (a)(1) here gives them the authority to assess taxes shown on returns. But, let’s suppose you don’t file a return; what authority is left to assess ? Well, Subsections 2 and 3 are left: "(2) Unpaid Taxes Payable By Stamp", (again, are income taxes payable by stamp) and: ”(3) Erroneous Income Tax Prepayment Credits" (erroneously withheld tax). That’s it. That's the true extent of the authority to assess taxes under the law “1- Taxes shown on returns (done voluntarily), 2 - unpaid taxes payable by stamp (stamp taxes on alcohol and tobacco products, and 3- prepayment credits. So where is the legal authority to assess income taxes NOT shown on a return made by a Citizen (for individuals who do not file) ? IT DOES NOT EXIST ANYWHERE IN THE LAW.
Now, it’s interesting to note, down at the bottom of 6201, it also states "(b) Amount Not To Be Assessed. (1) Estimated income tax.-No unpaid amount of estimated income tax required to be paid under section 6654 or 6655 shall be assessed". Remember, 6654 (e)(2)(C), your exception to the failure to file? Right here under 6201 their claimed authority, it states that if 6654 applies, no unpaid amount of estimated income tax assessed here is required to be paid.
So, if there is no return, the IRS has no legal authority to assess income taxes, and surprisingly enough, they admit that. So they just claim Section 6020 applies. The IRS claims that Section 6020 allows them to prepare and file a Form 1040 return for those individuals who refuse to do so voluntarily.
It states:
§ 6020. Returns prepared for or executed by Secretary.
(a) Preparation of return by Secretary. If any person shall fail to make a return required by this title or by regulation prescribed thereunder, but shall consent to disclose all information necessary for the preparation thereof, then, and in that case, the Secretary may prepare such return, which being signed by such person, may be received by the Secretary as the return of such person.
(b) Execution of return by Secretary.
(1) Authority of Secretary to execute return. If any person fails to make any return required by any internal revenue law or regulation made thereunder at the time prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return, the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise.
(2) Status of returns. Any return so made and subscribed by the Secretary shall be prima facie good and sufficient for all legal purposes. (emphasis added)
As you can see Subsection (a) says:
"but shall consent to disclose all information necessary in that case, the Secretary may prepare such return...".
Subsection (a) clearly requires consent from the Citizen. So the IRS claims that Subsection (b) is what applies in non-consensual circumstances. Subsection (b) says:
"if any person fails to make any return required by any internal revenue law or regulation made thereunder at the time prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return, the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise."
Here, the Secretary is authorized, in fact required, to file forms for individuals if they fail to do so. So, if the Secretary was required; why do they charge Citizens with the failure to file ? The only requirement that can be found in the law is for the Secretary. It’s the secretary that fails the requirement to file the assessment forms, not the Citizen. IT IS VIRTUALLY IMPOSSIBLE UNDER THE LAW TO LEGITIMATELY CHARGE ANY CITIZEN IN THE COUNTRY WITH FAILURE TO FILE A FORM 1040, BECAUSE THIS REQUIREMENT (the Secretary’s) IS THE ONLY REQUIREMENT TO FILE THAT CAN BE FOUND IN THE LAW, AND THE W-2 IS SUPPOSED TO “SUBSTITUTE” FOR A FORM 1040 WHEN NONE IS PROVIDED BY THE TAXPAYER according to the publications in the Federal Register. Also note that the Secretary must sign (subscribe) the return for it to be valid (prima facie). THEY REFUSE t sign their own work. WHY ?
Here’s why. The IRS claims that 6020(b) authorizes them to file a Form 1040 for a Citizen who refuses to do so voluntarily. However, the Internal Revenue Manual, in Chapter 5200, addresses the proper legal use and invocation of 6020(b). It states:
5290. Refusal to file - IRC 6020(b) Assessment Procedure.
5291. Scope
(1) This procedure applies to employment, excise and partnership returns .... the following returns will be involved:
(a) Form 940 - Employer's Annual Federal Unemployment Tax Return
(b) Form 941 - Employer's Quarterly Federal Tax Return
(c) Form 942 - Employer's Quarterly Tax Return for Household Employees
(d) Form 943 - Employer's Annual Tax Return for Agricultural Employees
(e) Form 11-B - Special Tax Return - Gaming Devices
(f) Form 720 - Quarterly Federal Excise Tax Return
(g) Form 2290 - Federal Use Tax Return on Highway Motor Vehicles
(h) Form CT-1 - Employer's Annual Railroad Retirement Tax Return
(i) Form 1065 - U.S. Partnership Return of Income
It clearly states that:
"This procedure applies to employment, excise and partnership tax returns".
Does that say that 6020(b) applies to individual returns ? No, it doesn’t. It applies to employment excise and partnership tax returns. And look at what forms it states they are authorized to file under 6020(b):
"Form 940 ... 941 ... 942 ... 943 ... 11-B ... 720 ... 2290 .. CT-1 ... and ... 1065"
End of list. Is Form 1040 listed here? No, it is not! Form 1040 is not one of the forms that the IRS is actually authorized to file under Section 6020(b), according to the Internal Revenue Manual itself! 26 USC § 6020(b) is authorized only for employment, excise & partnership tax returns.
Why? Because, the tax is not imposed in a direct fashion on the domestic income of U.S. Citizens and Form 1040 IS NOT REQUIRED BY LAW FROM ANYONE who is not a withholding agent, or non-resident alien, or federal emmployee. And, again in the Internal Revenue Manual (IRM), at Section 5293.1 it states:
Returns Prepared Under IRC 6020(b)
5293.1
General.
(1) If the taxpayer fails to file employment, excise and partnership tax returns by the specified date, the return should be prepared under the authority of IRC 6020(b).....
Does that say individual returns ? No ! Again it emphasizes employment, excise and partnership returns only, not individual returns.
Finally at IRM 5293.1 (7) it states:
(7) In unable to locate situations when the proprietors, partners or responsible officers and assets cannot be located and:
(a) when their SSNs can be determined process the returns and follow the guidelines in IRM 5263 for returns without full payment; or
(b) when their SSNs cannot be determined, close the delinquency using TC (transaction code) 593 with the proper closing code. (see the guidelines in IRM 5235(2)(c).
Now, what do subtitle C Social Security numbers have to do with delinquencies under subtitle A ? Why would they close a delinquency simply because there is no Social Security number for the individual ? Why is a Social Security number necessary to have an income tax delinquency ? Social security numbers, under the law, have nothing at all to do with income taxes under Subtitle A ! They (SSNs) are only to be used for the administration of the Subtitle C - Employment Tax laws contained in chapters 21 through 25, according to the law.
The improper use of 6020(b) can be further exposed by a review of Sections 6061 and 6065.
§ 6061. Signing of returns and other documents. Except as other wise provided by sections 6062 (Signing of corporation returns) and 6063 (Signing of partnership returns) , any return, statement, or other document required to be made under any provision of the internal revenue laws or regulations shall be signed in accordance with forms or regulations prescribed by the Secretary.
(emphasis added)
§ 6065. Verification of returns. Except as other wise provided by the Secretary, any return, declaration, statement, or other document required to be made under any provision of the internal revenue laws or regulations shall contain or be verified by a written declaration that it is made under the penalties of perjury.
Section 6061 states:
"any returns, statements or other documents required to be made under any provision of the internal revenue laws or regulations shall be signed in accordance with forms or regulations".
And Section 6065 states:
"any return declaration, statement, or other document required to be made under any provision of the internal revenue laws or regulation shall contain or be verified by a written declaration that it is made under the penalties of perjury".
Ever seen one ? Furthermore, Section 6020 subsection (b)(2) stated:
"Any return so made and subscribed by the Secretary shall be prima facie good and sufficient for all legal purposes."
I have never seen a substitute Form 1040, prepared by the IRS, that was either signed, or sworn to. Obviously that would be a violation of these laws. The IRS is required by law to sign these documents, but they refuse to do so, because they know they’re acting outside the authority authorized under the law and actually contained within the Revenue Manual. They know that if they sign the documents, they will assume the liability for the wrongful claims made on them. They do not want to do that, so they refuse to sign. They fill it all out and send it to you, for you to sign. They refuse to validate their own work with a signature as required under the law. but they demand that you, the Citizen, honor this fraudulent work with payment, without anyone from the government ever validating it for you or swearing that it's true. It is a violation of the law, but the Citizens generally accede to the demands, and out of ignorance, they comply. But the fact of the matter is: the law supports you, the Citizen, and does not support the United States government. Finally the Delegation Orders actually filed at the District offices, delegating the Authority to prepare and execute returns under 6020(b) read:
INTERNAL REVENUE SERVICE
SOUTHWEST REGION Order No. DD-OKC-150, Rev. 5
OKLAHOMA CITY DISTRICT CR: SD-61
DELEGATION ORDER Date of issue: Nov 27 1987
Effective Date: Nov 27 1987
Subject:
AUTHORITY TO EXECUTE RETURNS
Authority is redelegated to Revenue Officers, GS-9 and above to
prepare and execute the following returns on behalf of the District
Director under Section 6020(b) of the Internal Revenue Code.
Form 940, Employer's Annual Federal Unemployment Tax Return;
Form 941, Employer's Quarterly Federal Tax Return;
Form 942, Employer's Quarterly Tax Return for Household Employees;